First timer unemployment benefits have not experienced this height since October of 1982 when jobless claims peaked at 637,000. The January 31 report exposed a surprising 626,000 unemployment claims, much higher than the previous week’s 591,000. This also exceeded the last week’s forecast of 580,000 only.
This is not good for the economy, particularly to the housing market. Less money-making homeowners mean less funding for mortgage payments. Delinquencies may follow and then homes will be less into the threat of bank repossession. The terrible foreclosure crisis may continue.
The deadly cocktail of lowering home prices, increasing unemployment and foreclosures continues to kill the already weak economy.
The 4-week moving average for weekly filings is currently 582,250, far more than the earlier week’s 543,250.
The latest report on received unemployment checks shows a high 4,788,000 in January 24, compared to the previous report of 4,768,000.
As bad as it looks, economists think that the sudden peaking means the limit may be reached. Recession may be ending. Previous trends show that when claims spike very high, backing off is expected to follow. History showed that claims of this status can not get any worse.
Then, recovery may also be promoted by foreclosure-induced economic stimulus programs and assertive monetary policies. Foreclosure-driven lowering of interest rates may help a turn around with a lot of federal financing aid.
The 4-week average for continuing claims is now at 4,672,000 from the earlier 4,628,000.
With expected 500,000 workers laid-off, the unemployment rate may be up to 7.5 percent this January, from the earlier month’s 7.2 percent.
More jobless homeowners risk an increase in repossession. Hopefully the government’s economic stimulation plan that hopes to resolve the foreclosure problem may even affect the recovery of jobless claims. Everyone is keeping their hopes high with confidence to the current administration’s promise of change.
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