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New Unemployment Claims Continue to Climb

According to recent statistics compiled by the Labor Department, the number of people filing new claims for unemployment benefits jumped by 19,000 last week. This led to a total number of 479,000 jobless claims, representing the highest mark since April.

Sources indicate that the recent rise in unemployment claims is particularly striking in light of the job market’s steadiness through the first half of 2010. According to economist Neil Dutta of Bank of America/Merrill Lynch, the July numbers suggest “a labor market under a significant amount of stress.”

Of course, not every economist’s outlook is so dour. Ian Shepherdson, a researcher with High Frequency Economics, said the job loss numbers are “disappointing, but not a disaster,” and that fellow economists are “curious rather than disturbed” about the unemployment figures.

Here are a few key statistics from the report to help you decide just how disturbing the unemployment information is:

• Through the first seven months of 2010, unemployment claims are 5.5 percent higher than they were at the end of 2009.
• The four-week average of unemployment claims, which many economists consider more accurate than the less reliable weekly figures, rose by 5,250 to a total of 453,250.
• As unemployment claims rose, the number of people who receive monthly unemployment checks declined by 24,000 in the week leading up to July 24. However, the four-week average of those receiving unemployment benefits experienced an increase of 25,750 people.
• Through mid-July, roughly 3.31 million unemployed workers were receiving extended aid from the federal government. These federally-funded extended benefits are given to some people without jobs after they pass their state’s unemployment insurance time limit, which is usually about six months.
• In states hit hardest by the recession, federal benefits have been lengthened for up to 99 weeks.
• At the end of last month, the overall U.S. unemployment rate was 9.5 percent. As the July figures are tallied, it is almost certain that this number has not fallen since then.

Why the July Spike in Unemployment Claims?

One possible explanation for the recent unrest in the labor market is that routine summer shutdowns at car plants often skew unemployment figures. However, a Labor Department official claimed the annual carmaker flux had nothing to do with the recent rise in unemployment.

In addition, any new disturbances in the labor force add to an already large number of unemployed Americans. During the peak of the recession two years ago, roughly 8.2 million people lost their jobs. Many of these people have yet to find other employment.

The continued frustration of people trying to join the workforce has led to a rise in personal bankruptcy claims.