New claims for jobless benefits rose more than expected last week, exceeding even gloomiest of expectations.
The Labor Department reported yesterday that initial applications for jobless benefits in the week ending Dec. 6 rose to a seasonally adjusted 573,000 from an upwardly revised figure of 515,000 in the previous week. That was far more than the 525,000 claims Wall Street economists expected.
But that, according to one Harvard Professor is just the beginning. In the future a 6.7% un employment rate will look tame by comparison.
From Bloomberg by John Brinsely and Mike Schnieder entitled: U.S. Economy Faces ‘Very Deep’ Recession, Rogoff Says
The U.S. economy is the midst of a deep and sustained recession that probably won’t end without unemployment reaching as high as 10 percent, Harvard University professor Kenneth Rogoff said.
“We’re just going into the teeth of this recession. It’s a very deep recession, a worldwide recession,” Rogoff said in an interview on “Night Talk” with Mike Schneider to be broadcast today on Bloomberg Television. “Not the Great Depression, that’s hyperbole, but possibly the worst since World War II.”
He predicted the U.S. unemployment rate, which reached 6.7 percent in November, will rise to 9 percent to 10 percent.
Rogoff criticized Treasury Secretary Henry Paulson’s $700 billion financial rescue plan, saying it wasn’t “radical enough” to solve the credit crisis. Paulson has come under fire in Congress for abandoning the original intent of using the Troubled Asset Relief Program to buy toxic mortgage-related securities and help homeowners in favor of direct capital injections into banks.
“The policy’s been very erratic and insufficient,” Rogoff said. “They really didn’t come on a scale consistent with the problem.”
A yearlong recession is deepening as employers cut payrolls and companies and consumers reduce spending amid frozen credit markets. The number of Americans filing first-time claims for unemployment benefits last week soared to a 26-year high, a report today showed.
President-elect Barack Obama pledged on Dec. 6 to revive the economy and create jobs by making the “single largest new investment” in roads, bridges and public buildings since the Eisenhower administration. While he didn’t say how much such a package would cost, a group of more than 150 economists this week urged Obama to support a $900 billion stimulus plan.”
To date, companies have eliminated a net total of 1.9 million jobs this year.
