WASHINGTON (AP) -- The economy is looking bleaker as new applications for jobless benefits rose last week to the highest level in almost six months.
It's a sign that hiring remains weak and employers may be going back to cutting their staffs. Analysts say the increase suggests companies won't be adding enough workers in August to lower the 9.5 percent unemployment rate.
First-time claims for jobless benefits edged up by 2,000 to a seasonally adjusted 484,000, the Labor Department said Thursday. That's the highest total since February. Analysts had expected claims to fall.
Initial claims have now risen in three of the last four weeks and are close to their high point for the year of 490,000, reached in late January. The four-week average, which smooths volatility, soared by 14,250 to 473,500, also the highest since late February.
The report "represents a very adverse turn in the labor market, threatening income growth and consumer spending," Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.
Even the lowest mortgage rates in decades are a gloomy sign for the economy. Average rates on 30-year fixed mortgages fell to 4.44 percent, Freddie Mac said Thursday. While that's good for people looking to refinance or buy a home, low rates haven't been enough to energize a struggling housing market.
And the drop suggests investors are losing confidence in the recovery. Mortgage rates track the yields on U.S. Treasurys. They are falling because investors are shifting more money away from stocks and into the safety of Treasurys, which forces those yields down.
Those yields were pushed even lower this week after the Federal Reserve downgraded its assessment of the economy on Tuesday and announced a program to buy more Treasurys to help lift the recovery.
The stock market has been falling since the Fed's more pessimistic outlook. The Dow Jones industrial average dropped 58 points on Thursday and is down more than 300 points for the week.
Economists closely watch weekly claims, which are considered a gauge of the pace of layoffs and an indication of employers' willingness to hire.
Originally Posted by soonerscuba
