Jobless claims drop unexpectedly


But workers receiving government assistance is at a 26 year high:

The Labor Department reported that initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised figure of 530,000 for the previous week. That was significantly below analysts' estimates of 537,000, according to a survey by Thomson Reuters.

Despite the improved figure, large companies continue to lay off workers. AT&T Inc. said Thursday it is cutting 12,000 jobs, or about 4 percent of its work force, because of the economic downturn. The Dallas-based telecommunications company said the job cuts will take place this month and throughout 2009.

Wilmington, Del.-based DuPont said it will cut 2,500 jobs, mostly serving the U.S. and European automotive and construction markets, due to lower demand from the steep global decline in homebuilding, auto sales and consumer spending.

The economy is struggling as the housing slump and financial crisis has caused consumers and businesses to dramatically cut back on their spending. The National Bureau of Economic Research said Monday that the economy fell into a recession in December 2007.

Further evidence of the slowdown came Thursday in a Commerce Department report that said factory orders plunged in October by 5.1 percent, the largest decline in eight years.

Demand for non-defense capital goods, considered a good proxy for business investment plans, fell by 5 percent in October, the biggest decline since January and the fourth straight monthly decrease.

The number of people continuing to claim unemployment benefits last week reached 4.09 million, the highest level since December 1982, when the economy was emerging from a recession. More workers continuing to claim benefits is an indication that unemployed workers are having a harder time finding new jobs.

No silver linings to report, sorry. Along with the 4th straight month of plunging factory orders, the layoffs at giants like JP Morgan (9,200 jobs), AT&T (12,000), and Dupont (2,500) mean that there is not much hope for a quick turnaround.

Read the piece in today's AT by the Richman family of economists, "Keynesian borrowing won't solve our economic problems" to understand why Obama's "stimulus" plan is only going to make things worse.