Number of Americans receiving unemployment benefits takes largest drop in 18 years
Thursday, December 6th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ The number of Americans filing new claims for unemployment checks dropped slightly last week while the total number getting benefits took the biggest plunge in 18 years.
The Labor Department said Thursday that new claims for jobless benefits fell by 18,000 last week, the fifth weekly decline in the past six weeks.
The total number of laid-off workers getting unemployment benefits plunged by 349,000, the biggest one-week drop since Jan. 1, 1983, when the country was pulling out of its worst recession since the Great Depression.
A separate report showed that Americans' productivity _ output per hour of work _ rose at an annual rate of 1.5 percent in the July-September quarter, compared to an increase at a 2.1 percent rate in the April-May quarter.
The improvement in jobless claims was the latest positive sign that the country's current recession, which began in March, may be bottoming out.
Other reports this week have shown stronger-than-expected consumer spending and a rebound in construction activity.
All the positive news has triggered a rally on Wall Street with investors growing increasingly optimistic that the downturn is ending and the economy will resume growing early next year. The Dow Jones industrial average rose by 220 points Wednesday, closing above the psychologically important 10,000-level for the first time since Sept. 5.
Still, analysts cautioned that there will be more bad news before there are clear signs that the economy has entered a sustained recovery. The government on Friday will release the unemployment rate for November and private forecasters are predicting the number will jump to 5.7 percent, up from the 5.4 percent in October, reflecting the large number of layoffs that have occurred since the terrorist attacks.
But the continuing drop in weekly jobless claims and the sizable drop in the total of Americans drawing benefits was viewed as a good sign that the economy may be stabilizing after the severe jolt caused by the terrorist attacks.
The great fear had been that continued widespread layoffs would cause Americans to stop spending and this would cause the current recession, the first in a decade, to deepen. Consumer spending accounts for two-thirds of total economic activity.
The decline of 18,000 in benefit applications pushed the weekly total to 475,000, still a number indicating the country is in a recession.
The big decline in the number of Americans receiving benefits left this total at 3.64 million for the week ending Nov. 24. These data are released one week after the new-claims figure.
Even with the big decline, the total number of unemployed Americans receiving benefits is 1.3 million higher than it was a year ago when the nation's longest economic expansion had pushed the jobless rate down to a 30-year low of 3.9 percent.
The report showing that productivity rose 1.5 percent in the third quarter represented a revision from an initial estimate that productivity was climbing at a 2.7 percent rate.
The downward revision reflected the fact that the government dramatically lowered its estimate of for the gross domestic product. It initially reported that the GDP fell at an annual rate of 0.4 percent in the third quarter, a figure that was revised to show a drop of 1.1 percent.
Without output declining, the rise in productivity came from employers cutting their work force at an even faster clip.