The recent run of bad economic figures continued Thursday, as new jobless claims reached a six-month high, Wall Street lost more ground, several companies released disappointing earnings reports and the foreclosure rate rose for the eighth month in a row.
With such gloomy numbers coming on the heels of a pessimistic Federal Reserve statement this week — and declines in U.S. exports and more grim economic news from Europe — fears among economists are growing that continuing high joblessness may lead to a “double-dip” recession.
The Labor Department reported Thursday that last week’s “advance figure for seasonally adjusted initial claims was 484,000, an increase of 2,000 from the previous week’s revised figure of 482,000. The 4-week moving average was 473,500, an increase of 14,250 from the previous week’s revised average of 459,250.”
Although the immediate increase of 2,000 was modest, economists had been expecting the number of new benefit claims to fall. Also the “moving” figure, which every week takes the average of the previous four weeks and is thus considered a more reliable number, showed a much larger and also unexpected increase.
“Claims’ failure to move lower in the latest week was a disappointment and could point to further labor market weakness,” said Andrew Gledhill of Moody’s Economy.com. In a note to Decision Economics clients, economist Pierre Ellis said the Labor statistics “represents a very adverse turn in the labor market, threatening income growth and consumer spending.”
The continuing poor jobless numbers also are becoming an increasing political problem for the Obama administration. Rep. John Yarmuth, Kentucky Democrat, took aim at “a sense of floundering and indecisiveness” in the administration’s efforts to combat these unmoving jobs numbers.
“I’m not real happy with our economic team in the White House,” Mr. Yarmuth, an Obama supporter, said in a Louisville, Ky., speech to union activists. “They think it’s more important that Goldman Sachs make money than that you make money.”
“When [Treasury Secretary] Tim Geithner and [National Economic Council Director] Larry Summers talk about the economy, it’s like it doesn’t involve real people,” he told the Associated Press in an interview after the speech.
Not that Wall Street has had such a great week.
The Dow Jones industrial average fell 58 points to close at 10,319. The Standard & Poor’s 500 index ended the day at 1,083, a loss of 5 points, and the Nasdaq composite index slipped 18 points to 2,190. While Thursday’s losses of less than 1 percent were not overwhelming, they come on top of losses of 2.5 percent to 3 percent Wednesday and continued a weeklong losing streak.
Besides the jobless-claims numbers, the biggest hit on Wall Street was a report from Cisco Systems Inc. that its second-quarter revenue and future-revenue forecast both failed to meet analysts’ expectations. Cisco shares lost almost 10 percent and other technology stocks also fell. Other such “Main Street” staples as food seller Sara Lee Corp. and retailer Kohl’s Corp. released disappointing numbers or predictions.
“Theres renewed fear about the economic recovery rolling into a double-dip” recession, Henry Smith, chief investment officer at Haverford Trust Co., told Bloomberg news. “We had Ciscos comments about the second half and we had jobless claims rising when we expected a fall. All of this is weighing on investors concern about whether the recovery can transition into a sustainable expansion.”
About the only good economic news Thursday came from General Motors Co., which announced second-quarter profits of $1.33 billion, a sign of the company’s health sufficient for Chief Executive Officer Ed Whitacre to pronounce his tenure a success and say he will step down next month. However, GM is largely government-owned and hopes to be able soon to sell stock to the public, and so its optimism did not affect the broader markets.
Meanwhile Thursday, the foreclosure listing company RealtyTrac said mortgage lenders repossessed 92,858 properties in July, an increase of 9 percent over June, an increase of 6 percent over the previous July and the second-highest monthly total. The July numbers mark the eighth month in a row that final repossession figures have increased over the same month in the previous year.