Number Of Americans Receiving Unemployment Benefits Nearing 5 Million

A quick look at the latest on the situation around unemployment:

From the Associated Press:

WASHINGTON - The number of laid-off workers receiving unemployment benefits has jumped to an all-time high near 5 million while new jobless claims remain well above 600,000. Both figures were worse than expected and new projections from the Federal Reserve show unemployment rising for the rest of this year.

The Labor Department reported Thursday that the number of people receiving regular unemployment benefits rose 170,000 to 4.99 million for the week ending Feb. 7, marking the fourth straight week those receiving benefits have been at a record level on data going back to 1967.

The continuing claims figure also was significantly above the year-ago level of 2.77 million and underscored the difficulty people are having in this recession finding another job once they are laid off.

An additional 1.5 million people are receiving benefits under an extended unemployment compensation program approved by Congress last year, bringing the total number of people receiving unemployment benefits to 6.54 million for the week ending Feb. 7.

“The labor market is in disarray,” said Mark Zandi, chief economist at Moody’s Economy.com . It’s possible that job losses for all of February could total between 700,000 and 750,000 based on what weekly claims have done so far this month, he added.

To put this in perspective the number of people receiving unemployment benefits has increased by 80% on a YoY basis, and we’re on pace to lose 18-25% more jobs in February than we lost in January. This is before the 1.5 million people that are on the extended unemployment benefits program, those that have given up, people who are underemployed and the fact that the official numbers tend to lag reality.

The other thing to consider is that many of the jobs being lost are gone for good, so you have a lot of people who have to jump industries, enter retraining programs, etc, etc.

The thing that concerns me the most is the fact that a lot of people are probably facing a permanent reduction in income and benefits, as they won’t be able to find a job that pays as well as the one they lost. This is especially true in the manufacturing sector, but extends to other industries as well. Because not only does this hurt the economy as far as lost spending and saving power, but it hurts confidence as well and just isn’t especially good for the national mood.

I think the key to the recovery is not only creating jobs but creating equivalent opportunities.

You can read more here.

Source:

The Associated Press: “627k new jobless claims; continuing claims near 5M” — Martin Crutsinger, February 19, 2009.

Disclosure: at the time of publishing the author didn’t own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn’t be viewed as financial or investment advice.

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