US: Jobless Claims Jump to Highest Level Since November

The Greatest Depression is here.

US: Bankruptcies Reach Nearly 5-Year High

US Cities Face Up To MASSIVE Cuts

Why the US is as busted as a busted flush – IMF analysis suggests the US is fiscally bankrupt

John Williams: ‘Times That Try Our Souls’ (U.S. Bankruptcy – Hyperinflation – Great Depression), Preparedness Can Save Your Life:

The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That’s beyond containment. The government can’t cover it with taxes. They’d still be in deficit if they took 100% of personal income and corporate profits. They’d also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.

Aug. 19 (Bloomberg) — Claims for U.S. jobless benefits jumped to the highest level since November and Philadelphia-area manufacturing shrank for the first time in a year, indicating the economy may be slowing faster than forecast.

The number of unemployment claims unexpectedly shot up by 12,000 to 500,000 in the week ended Aug. 14, Labor Department figures showed today in Washington. The Federal Reserve Bank of Philadelphia’s general economic index turned negative in August, signaling contraction.

“There’s a red flag being waved right now that says ‘Danger,’” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Growth is going to slow in the second half and we might face something a little more ominous than that.”

Stocks dropped, led by declines in the largest U.S. companies including 3M Co., General Electric Co. and Boeing Co. that would be hurt by a slowdown in the recovery from the worst recession since the 1930s. A lack of jobs raises the risk that consumer spending will weaken further, just as manufacturing, which led the rebound, shows signs of stumbling.

The Standard & Poor’s 500 Index fell 1.7 percent to 1,075.63 at the 4 p.m. close in New York. Treasury securities climbed, sending the yield on the benchmark 10-year note down to 2.57 percent at 4:07 p.m. from 2.63 percent late yesterday.

Unexpected Increase

Claims exceeded estimates of all 42 economists surveyed by Bloomberg News and compared with the median forecast of 478,000. Estimates ranged from 460,000 to 495,000. The government revised the prior week’s claims figure to 488,000 from a previously reported 484,000.

Another report showed the index of leading indicators increased 0.1 percent in July after dropping 0.3 percent the prior month. The New York-based Conference Board’s gauge, which measures the economic prospects over the next three to six months, has shown a see-saw pattern over the past four months that indicates slower growth through the end of the year.

Today’s reports may feed voter discontent with the state of the economy heading into the November elections that will determine which party controls congress. President Barack Obama today said the jump in unemployment claims shows the urgent need for congressional action on legislation to cut taxes and ease credit for small businesses. Obama once again called on Republicans to stop blocking the measure and said lawmakers should take up the bill when they reconvene in September.

November Election

Republican lawmakers are critical of the president’s efforts to overhaul health-care policy and financial regulations, as well as the $862 billion stimulus measure, as economic growth and hiring have fallen short of some administration projections.

Economists at JPMorgan Chase & Co. in New York lowered U.S. growth estimates following today’s reports. The economy will grow at a 1.5 percent annual rate this quarter and at a 2 percent pace in the last three months of the year, a percentage point less than they previously estimated.

“The movement in jobless claims has been sharp enough and sustained enough to warrant a change in our economic forecasts,” economists Bruce Kasman, Michael Feroli and Robert Mellman said in a note to clients.

Factory Slump

The Fed Bank of Philadelphia’s factory index fell to minus 7.7 this month, the lowest reading since July 2009, from 5.1 in July. Economists surveyed projected it would increase to 7. The area covers eastern Pennsylvania, southern New Jersey and Delaware.

The bank’s measures of orders and shipments dropped, mimicking the results of a Fed Bank of New York report earlier this week that showed bookings and sales also decreased in its region. The bank’s so-called Empire State Index increased less than forecast as a result.

“It’s not a pretty picture,” said Raymond Stone, chief economist at Stone & McCarthy Research Associates in Skillman, New Jersey, who forecast the Philadelphia index would drop to minus 6, the lowest estimate of economists surveyed. “We’ll see continued gains in manufacturing output, but it might be very small.”

Manufacturing jumped in July as American factories churned out more automobiles, computers, appliances and machinery, a report from the Fed in Washington showed this week. A slowdown in consumer spending will reduce the need to rebuild inventories, while cooling growth overseas may limit exports, meaning the pace of industrial expansion may moderate.

Ford’s Plans

Automakers aren’t going to charge ahead in coming months. Dearborn, Michigan-based Ford Motor Co. has no plans to increase production of any of its current models because demand is fragile in the weak economic recovery, George Pipas, the automaker’s sales analyst, said in an interview this month.

The claims figures correspond with the week the Labor Department surveys companies to compile the monthly employment data. The four-week moving average of claims increased to 482,500 last week, the highest level since the week ended Dec. 5, 2009, from 474,500.

“We’re seeing a renewed pickup in layoffs,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “If firms aren’t hiring it’s probably because they’re not producing. Demand will slow in the third quarter.”

While companies have boosted payrolls seven straight months, firings have remained elevated. Private firms added 71,000 jobs in July, fewer than economists had forecast, according to government figures released Aug. 6. Unemployment held at 9.5 percent, near a 26-year high of 10.1 percent.

By Bob Willis and Courtney Schlisserman
Aug 19, 2010 10:09 PM GMT+0200

Source: Bloomberg

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