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Data signal economy is worsening

Jobless benefits hit a 25-year high, a report shows. Also, imports and exports drop in September.

November 14, 2008|Bloomberg News

The global economic slowdown is deepening, according to reports Thursday that showed the number of Americans collecting jobless benefits jumped to a 25-year high and U.S. exports plunged.

The number of workers receiving unemployment benefits climbed to 3.9 million in the week ended Nov. 1, the Labor Department said in Washington. Commerce Department figures showed that imports dropped in September by the most on record, and exports slid as demand for U.S.-made aircraft and computers declined.

"We are in a world economic downturn, there is no question about it, and it's shaping up to be pretty significant," said David Resler, chief economist at Nomura Securities International in New York. In the U.S., "it will be a very serious recession, rivaling the worst in the postwar period."

The worst German recession in at least 12 years and shrinking economies in other parts of Europe and in Japan will hurt U.S. exports, while a lack of credit and rising unemployment will cause U.S. consumers and businesses to keep retrenching. Even a second round of government stimulus will not promote a quick rebound, Resler said.

First-time claims for jobless benefits increased by 32,000 to 516,000 in the week ended Saturday, up from 484,000 the week before, the Labor Department said. The median estimate of economists in a Bloomberg News survey was for a reading of 480,000.

Payroll losses at companies including Citigroup Inc., Goldman Sachs Group Inc., Ford Motor Co. and Circuit City Stores Inc. -- the consumer electronics chain that went bust this week -- mean unemployment claims will probably rise further.

A record decline in the cost of fuel helped the U.S. trade deficit narrow more than forecast in September, offsetting the effect of the drop in exports. The gap shrank 4.4% to $56.5 billion, the smallest in almost a year, from $59.1 billion in August, the Commerce Department said.

Excluding petroleum, the deficit widened as exports dropped 6% to $155.4 billion, led by a $3.3-billion slump in sales of commercial aircraft.

Sales of fuel oil, drilling equipment, computers and food to foreign buyers also decreased.

Imports dropped by a record 5.6% to $211.9 billion.

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