Jobless Claims, Foreclosed Houses for Sale Keep Rising
Last week, the number of newly filed jobless claims increased more than expected due in part to auto industry layoffs, according to the Labor Department. The total number of Americans receiving jobless benefits reached a record number for the 15th consecutive week as inventories of foreclosed houses for sale continued to grow.
The number of newly filed jobless claims increased to an adjusted pace of 637,000 from an adjusted pace of 605,000 during the previous week. The pace was way above the 610,000 pace expected by employment analysts.
The rise in claims was another disappointment as claim declines in 4 of the previous 5 weeks raised expectations that the layoffs would soon end and the country was nearing its way to recovery from the effects of foreclosed houses for sale.
A Labor Department official said layoffs in the auto industry comprised the bulk of the newly filed jobless claims. Analysts estimated that Chrysler discharged 27,000 workers when it filed for bankruptcy on April 30. General Motors has announced it will temporarily close 13 of its plants up to July, affecting about 25,000 workers.
Nevertheless, economists are still hopeful the jobless claim trend will level off once layoffs in the auto industry stops.
Meanwhile, the Labor Department also reported that wholesale prices rose by 0.3 percent in April, bigger than the gain of 0.1 percent economists expected. While the prices of energy products dropped, prices of food costs made record increases over a one-year period.
Despite the gain in April, wholesale prices in the past 12 months have dropped by 3.7 percent, igniting worries of deflation. To combat these concerns, the Federal Reserve has launched measures to fight the drastic declines of prices.
The high number of Americans that continue to get jobless benefits is an indication that jobless workers are facing difficulties in finding new jobs. Large numbers of foreclosed houses for sale have eliminated various types of work, such as new construction jobs and other contracting jobs.
Problems in the labor market could worsen the recession, as unemployed workers and other consumers would reduce further their spending.
Since the start of the recession largely caused by foreclosed houses for sale in 2007, over 5.7 million job slots have been eliminated. In April, the unemployment rate reached 8.9 percent. Economists expect the jobless rate to reach 10 percent by December.
Illinois, among the top ten states with the highest foreclosure rates, reported the biggest increase in newly filed claims due largely to layoffs in manufacturing and construction companies, most of which have been battered by large number of foreclosed houses for sale.
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- Foreclosed Homes Turned Cheap Houses for Sale Will Not Be Saved by Plan
- Foreclosures Contribute to Highest Job Cuts in 34 Years
- 3 Other Factors Contributing to the Foreclosure Crisis
