By Bob Willis and Timothy R. Homan
Nov. 13 (Bloomberg) — The global economic slowdown is deepening, according to reports today that showed the number of Americans collecting jobless benefits jumped to a 25-year high and U.S. exports plunged.
The number of U.S. workers receiving unemployment benefits climbed to 3.9 million in the week ended Nov. 1, the Labor Department said today in Washington. Commerce Department figures showed that U.S. imports dropped by the most on record in September, and exports also slid as demand for American-made aircraft and computers declined.
“We are in a world economic downturn, there is no question about it, and it’s shaping up to be pretty significant,” said David Resler, chief economist at Nomura Securities International in New York. In the U.S., “it will be a very serious recession, rivaling the worst in the postwar period.”
The worst German recession in at least 12 years and shrinking economies in other parts of Europe and in Japan will hurt U.S. exports, while a lack of credit and rising unemployment will cause American consumers and businesses to keep retrenching. Even a second round of government stimulus will not promote a quick rebound, Resler said.
First-time claims for jobless benefits increased by 32,000 to 516,000 in the week ended Nov. 8, from 484,000 the week before, the Labor Department said. The median estimate of 40 economists in a Bloomberg News survey was for a reading of 480,000, compared with the originally reported 481,000 in the prior week.
Payroll losses at companies from Citigroup Inc. and Goldman Sachs Group Inc. to Ford Motor Co. and Circuit City Stores Inc., the consumer electronics chain that went bust this week, mean unemployment claims will probably rise further.
“When you start to see the downward pressure on wages as well as the credit crunch, that’s only going to make consumers much more nervous,” Linda Barrington, a labor economist at the New York-based Conference Board, said in a Bloomberg Television interview. “The labor market is only reinforcing a very pessimistic picture.”
U.S. stocks drifted between gains and losses as investors snapped up energy shares trading at their cheapest valuation on record, overshadowing today’s economic news. The Standard & Poor’s 500 Stock Index was up 0.1 percent at 853.3 at 11:25 a.m. in New York. Benchmark 10-year Treasury note yields rose to 3.75 percent from 3.65 percent late yesterday.
Highest Since 1991
The labor market is weakening as the economy appears to be in its first downturn since 2001. The jobless rate rose to 6.5 percent in October, the highest since 1994, the government said last week.
Employers cut 240,000 jobs last month, for a total so far this year of 1.2 million jobs lost, while the total number of unemployed Americans jumped to 10.1 million, the highest level in a quarter century, according to last week’s jobs report from the Labor Department.
A record decline in the cost of fuel helped the U.S. trade deficit narrow more than forecast in September, offsetting the impact of the drop in exports. The gap shrank 4.4 percent to $56.5 billion, the smallest in almost a year, from $59.1 billion in August, the Commerce Department said.
Excluding petroleum, the deficit widened as exports dropped 6 percent to $155.4 billion, led by a $3.3 billion slump in sales of commercial aircraft. Sales of fuel oil, drilling equipment, computers and food to foreign buyers also decreased.
The economy of the countries using the euro will shrink 0.5 percent in 2009 and Japan will drop 0.2 percent, according to revised growth forecasts by the International Monetary Fund this month. The German economy, Europe’s largest, contracted 0.5 percent in the third quarter after falling 0.4 percent in the second quarter, the government announced today.
Exports to the European Union were the lowest since December.
Imports dropped by a record 5.6 percent to $211.9 billion. The cost of a barrel of crude oil fell to $107.58, a decline of $12.41 from the prior month that was the biggest ever. The number of barrels bought was the fewest in more than five years.