9,000 more jobless applications were added to the total, which had been revised upwards to 645,000.
The number of people staying on benefit rolls rose in the previous week by 193,000 to a record 5.317 million.
Employers ranging from United Technologies Corp. to AMR Corp., which owns American Airlines, have announced more than 823,000 job cuts since the November election of Barack Obama, bringing total losses since 2007 to about 4.4 million. U.S. House Speaker Nancy Pelosi said this week she hasnâ€™t ruled out a second economic stimulus if the current package, meant to create or save up to 4 million jobs, doesnâ€™t work quickly enough.
â€œCompanies are still shedding payrolls at a rapid clip,â€ Jonathan Basile, an economist at Credit Suisse Holdings USA Inc. in New York, said before the report.
So what to make of this? And what do these recent numbers say about future unemployment?
Well, as I’ve been saying recently, the numbers aren’t slowing down and Credit Writedowns’ Edward Harrison explains why…
My take on the figures goes to the concept of stock and flow. The stock is the number of unemployed on the jobless roles. The flow is the number of people filing new claims. When it comes to calling recessions, I am usually more interested in the flow i.e. initial claims because it is an increase in the flow that is the coincident or even leading indicator of recession. This is true for jobless claims as much as it is true for the unemployment rate. However, the stock is a lagging indicator that does not signal a turn in the economy.
What is interesting about these numbers is the divergence in stock and flow. The flow is rather static (i.e. when one compares unadjusted claims to last yearâ€™s numbers). Weâ€™re talking about an increase in a yearâ€™s time of about 300,000 since mid January. On the other hand, the stock is mushrooming; there are 2.8 million more people on jobless roes than at this time last year. In mid-January that number was 2.1 million. 6 months ago it was 800,000.
Harrison predicts that we’ll hit 9% unemployment by this summer, which he rightly points out is 8.1% higher than the Obama administration’s prediction in the stimulus package. And that means that more stimulus could be needed down the road. But as I’ve explained, if there’s any time to do it, it’s now.
More as it develops.