Friday, November 9, 2001

Jobless benefit claims surpass 1984 levels
By Jeannine Aversa
Associated Press

WASHINGTON — The number of laid-off workers drawing jobless benefits reached an 18-year high last week, reflecting the nation’s economic hard times, though fewer Americans filed new claims for state unemployment insurance.

The Labor Department reported Thursday that for the work week ending Nov. 3, new jobless claims fell by a seasonally adjusted 46,000 to 450,000. That followed a drop of 11,000 the week before.

The number of laid-off workers continuing to receive unemployment benefits rose to 3.72 million for the work week ending Oct. 27. That was the highest level since April 23, 1983.

“It’s a difficult climate for workers,” said economist Clifford Waldman of Waldman Associates. “It will take more hard work and looking to find a job in this atmosphere.”

Companies have cut production, trimmed hours and let workers go in response to the lagging economy and the Sept. 11 attacks.

The nation’s unemployment rate soared from 4.9 percent in September to 5.4 percent in October and companies eliminated 415,000 jobs, the biggest one-month drop in 21 years. Economists predict the jobless rate will climb and payrolls continue to be trimmed.

Fallout from the more-than-yearlong economic slump, along with the terror attack,s caused the economy to contract at a rate of 0.4 percent in the July-September quarter. Many economists are predicting a bigger drop in the current quarter. That would meet one common definition of a recession: two consecutive quarters of declining economic output.

The decline in new claims last week put them at the lowest level since the week ending Sept. 15. That earlier report, however, did not capture layoffs resulting from the terror attacks because most affected workers were not able to file applications for jobless benefits that week. In the two weeks following that report, jobless claims rocketed.

“The drop in new claims could be a sign that the peak surge in 9/11-related layoffs has passed, but the net result is still declining payrolls and rising unemployment,” said Maury Harris, chief economist at UBS Warburg.

Some economists believe the unemployment rate will top out at around 6.3 percent in the first quarter of 2002.

The more stable four-week moving average of new claims, which smoothes out week-to-week fluctuations, declined last week to 487,250, the lowest since early October.

In an effort to prevent the economy from sinking deeper into recession, the Federal Reserve cut a key interest rate Tuesday by one-half of a percentage point. It was the third cut of that size since the attacks and the 10th rate reduction this year.

Economists are hoping lower borrowing costs will induce consumers and businesses to spend and invest, which could prevent further weakening of the economy.

Still, a big fear among analysts is that rising unemployment and lingering fears about more attacks and anthrax scares might cause consumers to further curtail spending.

Economists are counting on the Fed’s aggressive easing, President Bush’s tax relief enacted earlier this year and new tax cuts and increased government spending being contemplated by Congress to lead to a recovery by the second half of next year.