Demons & Dialog

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Jobless claims hit record peak, orders plummet

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By Lucia Mutikani

WASHINGTON (Reuters) – The number of jobless claiming benefits jumped to a record in mid-January, while new orders for durable goods fell for a fifth straight month in December, according to data on Thursday that showed the economy in steep decline.

Sales of newly built single-family homes slumped to their lowest levels since records started in 1963.

The latest batch of grim data fanned worries that the year-long recession, triggered by the collapse of the housing market, could be the worst economic slump since the Great Depression of the 1930s.

“We don’t see much relief (for the economy) until much later this year. We are passing through the darkest part of the storm right now,” said Tim Quinlan, economic analyst at Wachovia Securities in Charlotte, North Carolina.

The number of people remaining on the benefits roll after drawing an initial week of aid, or continued claims, rose 159,000 to a higher-than-forecast 4.776 million in the week ended January 17, the most recent week for which data is available.

The Labor Department said this was the highest reading since its records on this series began in 1967. Analysts had expected continued claims to be 4.65 million.

“These are weak numbers, showing the recession continues to drag and is even intensifying,” said Andrew Bekoff, chief investment officer at LPB Capital LLC in Doylestown, Pennsylvania. “The bigger story will be tomorrow’s reaction to fourth-quarter GDP results.”

The Commerce Department is expected to report on Friday that gross domestic product, the broadest measure of the U.S. economy, contracted at an annual rate of 5.4 percent in the fourth quarter, according to a Reuters survey.

U.S. equity indexes extended losses after housing data. U.S. Treasury debt prices pared losses while the dollar rose versus euro.

DROPPING DURABLES

Highlighting the deepening malaise, new orders for long-lasting manufactured goods dropped 2.6 percent in December. Durable goods orders for November were revised to show a decline of 3.7 percent, the Commerce Department said.

For 2008, overall orders tumbled 5.7 percent, the second biggest decline since 2001, after rising 1.3 percent in 2007.

With the year-long economic downturn showing no signs of reaching a bottom anytime soon, and the accompanying wave of layoffs also displaying no evidence of peaking, households have slashed spending on big-ticket items.

The Federal Reserve left its target range for overnight interest rates at zero to 0.25 percent on Wednesday and said it was prepared to buy long-term U.S. government debt if warranted to improve market conditions.

Separately, the Commerce Department said new home sales tumbled to a 331,000 annual pace, the lowest since it started keeping records in 1963. November’s sales were sharply revised down to 388,000 annual rate, which was previously reported as 407,000.  Continued…

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Written by Michael Cooper

January 29, 2009 at 3:50 pm

Posted in Uncategorized

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