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Jobless Claims Rise, but Companies are Growing

As the economic recovery lumbers along at an unsteady pace, the past week brought both good and bad news for jobless Americans.

The Bad Financial News

First, the bad news: the Labor Department recently announced that applications for new unemployment insurance benefits topped 500,000 this week, a total that hasn’t been seen since last November.

Statistics show that employers are slashing jobs once again:

• Last week, initial jobless claims rose by 12,000 to reach the half-million mark, countering the predictions of many economists who thought more jobs were on the way. This is the fourth such increase in five weeks.
• Until this recent drop, job loss claims had been slowly dropping since their peak at 651,000 in March 2009.
• The four-week average of jobless claims, a more stable figure, also rose by 8,000 to 452,000. This is the highest four-week figure since November.

In further negative news for unemployed workers, the Conference Board, a private research group, said that economic activity grew by a paltry 0.1 percent in July, suggesting that the rest of the year will experience see slow growth at best.

The Good Financial News

Despite the rise in unemployment claims, there is some good news for the American economy. According to a report in USA Today, corporations with cash to spend are throwing more money at capital purchases.

As companies spend more to increase their capital, many economists believe that corporate purchases and spending will boost business, thereby creating more jobs. Below are some figures that suggest an improvement in business health:

• In the past three months, the annual rate of business spending on software and equipment rose almost 22 percent from the first quarter of 2010. This is the largest such rise in more than ten years, and is potential good news for the American worker, especially compared with 30 percent drops in business spending in 2008 and 2009.
  
• During the recession, companies simply sat on their cash. Now, they apparently feel more optimistic about the economy, as they’ve increased purchases of items like computers, software, trucks, cars, aircraft and industrial machinery.
• There are plenty of individual success stories. Caterpillar, a large company that fired 9,000 workers last year, is adding 4,200 jobs in 2010 to meet increasing demand for its products. In addition, both FedEx and Coca-Cola boosted their capital spending by about15 percent.

Is increased capital spending a guarantee that more jobs are on the way? Not necessarily. But it is a very positive sign for an economy desperately seeking forms of progress.

If increased corporate spending has not helped you find a job, or the recession has left your finances in a rut, consider contacting a personal bankruptcy lawyer to see if bankruptcy could help you handle your rising debts.