US jobless rate highest for 16 years

The initial jobless claims for last week increased by 27,000 claims to 542,000 which represents a 16-year high, as investors and analysts had hoped that jobless claims would come down to 505,000.

The Labor Department said today that that the Conference Board’s index of leading economic indicators has fallen by 0.8 percent, and manufacturing is similarly at an 18-year low.

The high rate has sent shockwaves through Wall Street and has caused stocks to fall, which is replicating the recession of 1992.

The US stock market benchmark index is heading for its largest annual fall and it is predicted that the situation will only get worse as greater pressure will be placed on the Federal Reserve by Barack Obama’s new administration.

The number of workers still collecting unemployment benefits rose for the third consecutive week to over 4 million, meaning that the labour market has remained increasingly volatile which is sure to affect consumer spending further.

The Senate is believed to be setting up a bill this week that has already been passed by the House of Representatives that will extend unemployment benefits, although it is hoped that Congress will find the money for the rescue package for the US car industry.

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