WASHINGTON — First-time claims for jobless benefits increased more than expected last week, a sign employers are reluctant to hire and the job market remains weak. And while consumer spending jumped by the most in nearly eight years in August due partly to the government's Cash for Clunkers program, economists worry whether that rebound can be sustained with U.S. households facing rising unemployment, tight credit conditions and other obstacles.
The Labor Department said Thursday that initial claims for unemployment insurance rose to a seasonally adjusted 551,000 from 534,000 in the previous week. Wall Street economists expected an increase of 5,000, according to a survey by Thomson Reuters.
The increase comes after three weeks of declines. Weekly claims have been trending down since the spring, but the decline has been painfully slow. The four-week average, which smooths out fluctuations, dropped to 548,000, about 110,000 below its peak in early April (see chart above).
From the peak in early July, the four-week average has fallen by 110,750, and that measure of jobless claims has fallen in 19 out of the last 25 weeks. A comparison of the recent 110,750 decline to the last two recessions in the chart above, suggests that claims have been falling pretty sharply, and not "painfully slow," especially compared to the 1990-1991 recession.