New jobless claims rise, but analysts say recession is weakening

  • Thursday, January 3, 2002 9:00pm
  • Business

Associated Press

WASHINGTON — The number of Americans filing new claims for unemployment insurance rose sharply for a second straight week even as signs emerged that the worst of the recession may be over.

The Labor Department reported Thursday that for the workweek ending Dec. 29, new claims for jobless benefits jumped by a seasonally adjusted 36,000 to 447,000, the highest level since the beginning of December.

The week before, new claims rose by 26,000, according to revised figures. That was a much bigger increase than the 7,000 gain previously reported.

"The bounce likely reflects a return to more normal weather" and thus doesn’t conflict with indications that the U.S. economy is improving, said Maury Harris, chief economist with UBS Warburg. "Still, the level of claims remains too high to stabilize the unemployment rate."

Given that, many economists are forecasting a rise in the nation’s unemployment rate — now at 5.7 percent — to 5.8 percent or 5.9 percent in December. The government releases its monthly employment report Friday.

Many economists also are projecting payrolls to be down by around 150,000 to 175,000 in December, compared with a huge loss of 331,000 in November.

Economist Clifford Waldman of Waldman Associates predicted continued heavy losses of factory jobs, and didn’t predict many gains for retail jobs despite the holiday hiring season.

On Wall Street, the latest jobless claims report didn’t get investors down. The Dow Jones industrial average gained 98.74 points to close at 10,172.14.

New jobless claims tend to be volatile during the holiday season, private economists say, so they put more weight on the four-week moving average of new claims, which smoothes out week to week fluctuations.

The more-stable four-week moving average declined to 409,750, the fourth weekly drop and the lowest level since Sept. 1.

To cope with the ailing economy, which fell into recession in March, companies have cut production, trimmed hours and let workers go.

Even if the economy does bounce back in the spring as many economists hope, analysts said the unemployment rate — a lagging economic indicator — will continue to rise in the coming months because companies will be reluctant to hire workers back quickly.

"I think the employment situation will remain fairly bleak," said William Cheney, chief economist at John Hancock.

Many economists believe the jobless rate will top out at around 6.5 percent by June or July, plateau for a while, and start going down in the fall or winter.

"It’s entirely likely to see the unemployment rate go up even after an economic recovery has been declared," said Carl Tannenbaum, chief economist with LaSalle Bank/ABN AMRO. "Corporations will make sure they are healthy before they begin rehiring."

To revive the economy, the Federal Reserve cut interest rates 11 times last year, something that many economists believe will set the stage for an economic recovery in the first half of this year.

A spate of recent economic reports provided some signs that the recession might be bottoming out.

On Wednesday, the Institute for Supply Management reported that a rise in new orders to factories helped push its key gauge of manufacturing activity higher in December.

Reports released last week showed consumer confidence rebounded in December, home sales surged in November and demand for many big-ticket items posted gains in November.

Adding to that good news, the Commerce Department said in a report released Thursday that construction activity rose by a solid 0.8 percent in November, led by a sharp increase in spending on big government projects. Commercial projects, including hotels and industrial complexes, by private builders also posted gains.

Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.