People draw unemployment benefits at 26-year high

By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer – 1 hr 41 mins ago

WASHINGTON – More evidence of consumers' weary state and the nation's deteriorating job market came Thursday with reports that people continuing to draw unemployment benefits climbed to a 26-year high, while retail sales and orders to U.S. factories sank.

The number of newly laid-off people signing up for unemployment benefits last week dropped by 21,000 to 509,000, the Labor Department reported. Even with the drop — which was better than the increase economists were forecasting — the level of jobless applications was still quite high and pointed to a deeply troubled employment climate.

The number of people continuing to draw unemployment benefits last week climbed to 4.09 million, a 26-year high.

AT&T, the Dallas-based telecommunications giant, announced it will slash 12,000 jobs — or about 4 percent of its work force — in response to all the economic troubles. Job reductions will take place this month and into next year.

A grim picture was forming as retailers reported their November sales Thursday.

Costco Wholesale Corp., usually a strong performer, reported a bigger-than expected drop in same-store sales. Other retailers that saw declines in same-store sales are Bon-Ton Stores Inc., Limited Brands Inc. and Pacific Sunwear of California Inc. Same-store sales, or sales at stores open at least a year, are considered a key indicator of a retailer's health.

All told, the Goldman Sachs-International Council of Shopping Centers sales index of retailers is expected to show a 1 percent drop in November, slightly worse than the 0.9 percent decline in October. That would be the weakest November performance since at least 1969 when the index began.

"Basically shoppers and workers are being told there is no Santa Claus," said Richard Yamarone, an economist at Argus Research.

Orders to U.S. factories plunged in October by the sharpest amount in over eight years as a deepening recession caused big cutbacks in demand for steel, autos, computers and heavy machinery, the Commerce Department said.

Factory orders dropped 5.1 percent in October, the largest decrease since an 8.5 percent fall in July 2000. It also was larger than the 4 percent drop that economists had been expecting. They believe manufacturing will continue to be under pressure for many more months, reflecting a deepening recession that is already the longest slump in a quarter-century.

Wall Street received the grim economic reports with relative calm. The market has advanced in seven of the last eight sessions, a sign that some stability is returning to the Street. The Dow Jones industrials were down about 40 points in morning trading.

Elsewhere, central banks in Europe, in a series of separate moves, slashed their key interest rates Thursday to cushion fallout from the financial crisis, which is hobbling economies worldwide.

The European Central Bank dropped its rate to 2.5 percent, from 3.25 percent. The Bank of England lowered its rate to 2 percent, the lowest since 1951. The Swedish Riksbank cut its key rate, by a record 1.75 percentage points to 2 percent.

Federal Reserve Chairman Ben Bernanke, meanwhile, will speak about the housing crisis, which has driven up foreclosures and forced financial companies to log massive losses on soured mortgage investments. The housing debacle touched off the worst financial crisis since the 1930s that Bernanke and Treasury Secretary Henry Paulson have been desperately trying to bring under control.

And the chiefs of Chrysler LLC, General Motors Corp. and Ford Motor Co. returned to Capitol Hill Thursday to make a fresh plea for as much as $34 billion in emergency aid. Trying to win over skeptical lawmakers, automakers and their union on Wednesday promised labor concession and restructuring. Were one or more of Detroit's Big Three to fail, that would deepen the recession and cause more job losses, industry officials warned.

Heading into the holidays, the country's economic picture has darkened further, according to a Federal Reserve survey of business conditions around the country released on Wednesday. Americans hunkered down, forcing retailers to ring up fewer sales and factories to cut back on production.

The survey suggested the country was sinking deeper into recession.

"Economic activity weakened across all Federal Reserve districts," the report concluded.

The Fed didn't use the word "recession," but just two days earlier the National Bureau of Economic Research declared what many Americans already knew in their bones: that the country had been suffering through one since last December.

To cushion the fallout, Bernanke said Monday that the central bank is prepared to lower its key interest rate and to explore other ways to revive economic activity. Many economists predict the Fed will cut its rate — now near a historic low of 1 percent — at its last scheduled meeting this year on Dec. 16.

"We've seen things fall off a cliff," said economist Ken Mayland, president of ClearView Economics. "Everybody — consumers and businesses — are just freezing."

"Retailers were preparing for a relatively slow holiday sales season," the Fed report said. New York retailers said the holiday sales season is likely to feature more discounted prices on merchandise than last year. Some retailers in the Fed regions of Boston, Philadelphia, Cleveland and Dallas planned to cut capital spending projects for 2009.

Consumer spending — which includes retail sales — is a major shaper of national economic activity. But job cuts, tanking investment portfolios and sinking home values have made American consumers wary of spending.

The economy jolted into reverse in the summer as consumers slashed their spending by the most in 28 years.

Many believe the economy will continue to shrink through the rest of this year and into the first quarter of next year. At 12 months and counting, the current recession is longer than the 10-month average length of recessions since World War II. The record for the longest recession in the postwar period is 16 months, which was reached in the 1973-75 and 1981-82 downturns.

Count me in, I only got a temp-job, then I'm out to look for something on my own business again...not easy, nobody wants to spend money anymore.

The temp job is something to be thankful for. I was a temp many years ago when I was in between jobs.

I was laid off for 4 months but got my great union job back ( for now) but it looks good, any more info would be proprietary

who's the skinny kid ?...LOL...just kiddin'...now...repeat after me..." Ohhhhhhh to be young again "...once again...." Ohhhhhhh to be young again "... ...gulp !!

I only have a babysitting job, but I am very thankful for it

Remember when you look at the unemployment numbers they ignore what may be an even larger number of people out of work.

Here in Michigan unemployment numbers are based on the people drawing and applying for unemployment benefits. Those who are not working but who have exhausted their benefits are not counted.

It's my guess that the true number of people out of work here in Michigan is around 20% or higher.

That's great.

Thankfully I have a recession proof job. Everyone has trash and needs electricity.

Yeah, that was a skinny kid. But...I don't need to be young again. Things are good now.

I put the pic up for an 80's hair thread, btw.

You have an important job taking care of children.

You are most likely correct. I don't think they count the small business owners and self-employed, who aren't even qualified in most states for unemployment benefits.

I don't know what the numbers would be, all I know is that there used to be hundreds of vans/trucks flying around the place I live (self-employed/construction/services etc), now I barely see one or 2.

Good point, Lynann. The numbers are deceiving. It is higher.
There are many people whose unemployment benefits have expired.

and...what high hair you have ...lol...80's all the way...but...didn't you really grow up in the 70's [ watch it !!...your age is showing...or is that your hair !...LOL ]

My hair was usually bigger. And the color was constantly changing. I had my hair calmed down for the high school reunion.

Yeah, I graduated from high school in 77. I don't see any problem with that. I am me.

Btw, I picked up a pack of cigs at Walmart today. The cashier had to answer two questions. One- is customer older then 18? - yep. Two - is customer younger then 40? She said yes.

You have big time job security.

i soon will be put on a different shift at the co i work at.they are talking cut backs. and in April we are up for contract in the UAW union i work for. if you seen what is happen in michigan with car co. it does not look good. the talk is that the co i work for is going to fold.or sell off and bust the union.they already bought a co in china and moved 12% of are work their.i am keeping my fingers crossed that soon i might be in the unemployment line.

Out of the seven apartments I have running
3 are in the process of eviction

I forgot about the self-employed. Good point.

As of January 1st the are outsourcing everything that goes on after my dept... I am on the edge of a cliff and everything behind me has fallen off... hopefully the find no way of outsourcing my dept.. I do graphic design... They are saving $800k a year doing that.. hopefully it lasts at least til I complete this degree..