New jobless claims fall to lowest level since late July

By Jeannine Aversa

Associated Press

WASHINGTON – Fewer Americans filed new claims for unemployment insurance, the third weekly decline in a row, raising the hope that the flurry of layoffs hitting workers after the terror attacks is abating.

The Labor Department reported Thursday that for the work week ending Dec. 15, new claims for jobless benefits dipped by a seasonally adjusted 11,000 to 384,000, the lowest level since July 28.

Jobless claims fell by a sharp 85,000 for the work week ending Dec. 8, and dropped by 13,000 the week before that. In fact, new claims have fallen in seven of the last eight weeks.

Even with these declines, economists warn that the country is still in for a period of rising unemployment.

To cope with the sour economy, which fell into recession in March, companies have cut production, trimmed hours and let workers go. After the Sept. 11 terror attacks, jobless claims rocketed, manufacturing plunged deeper into recession and consumer confidence plummeted.

Even if companies reduce the speed at which they lay off employees, the jobless rate will keep rising if companies are reluctant to hire workers back.

The nation’s unemployment rate jumped from 5.4 percent to 5.7 percent in November, and businesses slashed payrolls by more than 300,000. Since employment peaked in March, 1.2 million Americans have lost their jobs.

Some economists predict the jobless rate will climb close to 7 percent next year before a rebound in economic growth triggers new hiring. In the last recession in 1990-91, the unemployment rate hit 7.8 percent with a job loss of 1.8 million.

On Wall Street, the Dow Jones industrial average was down 32 points and the Nasdaq was off 28 points in the first hour of trading.

The jobless report also showed that the more stable four-week moving average of claims, which smoothes out week to week fluctuations, also declined last week to 438,000, the lowest level since Sept. 22.

Despite rising unemployment, fewer Americans were past due on their credit card bills in the third quarter, another report showed.

The seasonally adjusted percentage of credit card accounts 30 or more days past due dipped to 3.77 percent in the July-September quarter, down from 3.93 percent in the previous quarter, according to a quarterly survey by the American Bankers Association.

“Many probably expected higher delinquencies, given the terrorist attacks and the economic downturn. But there were many factors that helped brighten the financial picture for consumers last quarter, including a steep decline in gas prices, the income tax rebate and high levels of mortgage refinancing,” said James Chessen, the association’s chief economist.

The reports come one day after a key gauge of economic activity rose for a second straight month in November, fueling hopes that the current recession will be over by spring.

The Conference Board reported Wednesday that its index of leading economic indicators rose by a stronger-than expected 0.5 percent last month after a gain of 0.1 percent in October.

Analysts read the back-to-back gains as a good sign that the country’s first recession in a decade was bottoming out.

In an effort to revive the economy, the Federal Reserve has cut interest rates 11 times this year.

On Capitol Hill, the House passed a package of tax cuts and unemployment aid early Thursday. The plan, which is aimed at stimulating the economy, was sent to the Senate where staunch opposition from Democratic leaders seemed to guarantee its failure.