Jobless claims jump to 7-year high

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By David M. Dickson

New claims for unemployment benefits soared to a seven-year high last week, exports in September declined by $10 billion and the Bush administration began its last fiscal year by running a $237 billion deficit in October, by far the largest monthly shortfall in history, government agencies reported Thursday.

New jobless claims totaled 516,000 last week, representing a 32,000 increase over the previous week and reaching their highest total since shortly after the Sept. 11, 2001, terrorist attacks, the Labor Department reported Thursday.

"Should the weekly number remain above 500,000, it would be a strong indication that the labor market is deteriorating more rapidly than previously thought," said Andrew Gledhill, an economist with Moody's Economy.com.

Spurred by Treasury Secretary Henry M. Paulson Jr.'s expenditure of $115 billion to purchase stock in the nation's largest banks, the budget deficit for the month of October soared to a record $237 billion, the Treasury Department reported Thursday. Analysts have been projecting that the deficit in fiscal year 2009 will exceed $1 trillion.

In a separate report, nearly 280,000 U.S. households received a foreclosure filing in October, including a default notice, a warning of a pending auction or a notification of foreclosure, according to RealtyTrac Inc. of California. October foreclosure filings were 25 percent higher than year-earlier levels.

Meanwhile, rapidly declining oil prices and a plunge in crude oil imports overcame a nearly $10 billion decrease in exports in September, helping to reduce the U.S. trade deficit by 4.4 percent that month.

The trade deficit declined in September by $2.6 billion to $56.5 billion as crude oil imports plunged by more than 1.5 million barrels per day, the Commerce Department reported Thursday.

The average price for a barrel of crude oil has declined from a record $124.66 in July to $107.58 in September.

The $9.9 billion fall in exports in September reflected the worldwide economic slowdown as U.S. trading partners demanded fewer U.S. goods and services.

"Trade can no longer prop up the U.S. economy," said Nigel Gault, chief U.S. economist at IHS Global Insight.

Excluding petroleum products, the merchandise trade deficit increased by nearly $2 billion to $35.6 billion. The trade deficit in advanced technology products jumped to a record $7.8 billion in September as ATP exports declined $3.6 billion. The merchandise trade deficit with China reached a record $27.8 billion.

"The trade deficit will make the recession longer and deeper, and lessen the positive benefits of a second stimulus package," said Peter Morici, a business professor at the University of Maryland. "Along with the credit crisis and resulting slowdown in new housing and commercial construction, the trade deficit is driving up unemployment."