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Weekly Jobless Claims Soar Past 500,000

photo: solidstate via Flickr

The rule of thumb in the economic world is that weekly initial jobless claims must be in the 300,000 range in order to get to actual job growth. We haven’t been at 300,000 since the beginning of the recession in December 2007. During the worst spell of the recession, in early 2009, the number was at 650,000. But today’s jump brings us to 500,000, a high for the year.

New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday’s report.

You can see the trajectory in this Calculated Risk graph. We’ve basically gone sideways since last year, but the last month has moved upwards. “The economy ran into a wall in August,” according to one analyst quoted in the story.

In 1982, the unemployment rate added a full point, from 9.8 to 10.8, between August and December, right in the middle of the midterm elections. Democrats regained 26 seats in the House, although they split even in the Senate. It would be a miracle if Democrats could hold losses to that level this year if the same dynamic happens with unemployment.

Somebody should do something.

CommunityThe Bullpen

Weekly Jobless Claims Soar Past 500,000

The rule of thumb in the economic world is that weekly initial jobless claims must be in the 300,000 range in order to get to actual job growth. We haven’t been at 300,000 since the beginning of the recession in December 2007. During the worst spell of the recession, in early 2009, the number was at 650,000. But today’s jump brings us to 500,000, a high for the year.

New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday’s report.

You can see the trajectory in this Calculated Risk graph. We’ve basically gone sideways since last year, but the last month has moved upwards. “The economy ran into a wall in August,” according to one analyst quoted in the story.

In 1982, the unemployment rate added a full point, from 9.8 to 10.8, between August and December, right in the middle of the midterm elections. Democrats regained 26 seats in the House, although they split even in the Senate. It would be a miracle if Democrats could hold losses to that level this year if the same dynamic happens with unemployment.

Somebody should do something.

UPDATE: The index of leading economic indicators is basically flat. We could see zero or very little growth for the rest of the year. And while the last two month’s job surveys showed losses mainly because of the end to hiring for the Census, we could see continued losses, if these weekly jobless claims stay this high.

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David Dayen

David Dayen