Unemployment Benefit Applications Stuck Above 400K
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By Christopher S. Rugaber
WASHINGTON -- The number of Americans seeking unemployment benefits was mostly unchanged last week, evidence that the struggling economy isn't generating many jobs.
Unemployment benefit applications ticked down 1,000 to a seasonally adjusted 428,000, the Labor Department said Thursday.
Applications have topped 400,000 for 12 straight weeks. Applications had fallen in February to 375,000, a level that signals sustainable job growth. They stayed below 400,000 for seven of nine weeks. But applications then surged to an eight-month high of 478,000 in April and have shown only modest improvement since that time.
The four-week average, a less volatile measure, has been stuck at about 426,000 for a month.
High gas prices have cut into consumer spending and prompted many companies to cut back on hiring. A parts shortage stemming from the March 11 earthquake in Japan has also slowed job growth.
Employers added only 54,000 net new jobs in May, much slower than the average gain of 220,000 per month in the previous three months. The unemployment rate rose to 9.1 percent.
The economy needs to generate at least 125,000 jobs per month just to keep up with population growth. And at least twice that many jobs are needed to bring down the unemployment rate.
The U.S. economy isn't growing quickly enough to generate that many jobs. The government said last week that the economy grew only 1.9 percent in the January-March quarter. Most analysts suspect that the economy has been growing at about the same weak rate in the April-June period, which ends Thursday.
The economy typically needs to grow at 5 percent for a year to reduce the unemployment rate by 1 percent.
The International Monetary Fund on Wednesday became the latest institution to forecast weak growth for the U.S. economy this year and next. The lending organization said that it expects growth of 2.5 percent this year and 2.75 percent in 2012.
Unemployment will still average 8.4 percent in 2012, the IMF predicted in its annual report on the U.S. economy.
Last week, the Federal Reserve acknowledged that the economy has slowed in recent months. Fed officials said that "recent labor market indicators have been weaker than anticipated."
The central bank reduced its forecast for employment and growth this year. It projects that unemployment at the end of 2011 will be 8.6 percent to 8.9 percent. That's worse than a Fed forecast two months ago, which put the unemployment rate at 8.4 percent to 8.7 percent.
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