A new record we don't want: Continuing jobless claims hit 5.3 million

There is perhaps no more telling snapshot of the current pronounced U.S. recession than continuing jobless claims, which measures how long it takes to find new employment. This week continuing claims rose another 193,000 to yet another record -- 5.3 million adults -- the U.S. Labor Department announced Thursday, as slack hiring remained pervasive.

Meanwhile, initial jobless claims increased 9,000 to 654,000 for the week ending March 7. Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 646,000. The 4-week moving average rose 6,750 to 650,000.

Tell-tale stat: Continuing claims

Still, while the initial jobless claims total is not low, the real concern is continuing claims. High continuing claims reflect labor market stress, and the long time it takes for those who lost their jobs to find comparable employment. Few companies are filling vacancies, many major corporations have announced large lay offs, and even temporary work assignments are declining, another negative sign for the labor market and the economy.

Why is that especially relevant for the U.S. economy and the stock market? Unlike many western European nations, the United States offers only a partial unemployment insurance program. In most states, the unemployment benefit barely places one above the poverty level, and it's certainly not going to cover a typical mortgage payment and related home expenses. That means that as adults fail to find comparable work after unemployment benefits expire, home mortgage foreclosure rates are almost guaranteed to rise. And investors have seen what rising foreclosure rates have done to mortgage backed securities defaults: they helped set the financial crisis in motion.

True, Congress has passed aid to help states increase the length of state unemployment benefits, which in many cases last about 26-30 weeks, but the key to limiting economic damage caused by continuing jobless claims is job growth.

Economic Analysis: The above underscores the importance of job growth to the health of the nation. The 'great American job creation machine' balances the economic ship of state, if you will, which is why it must remain policy makers' top priority, moving forward.

It also underscores why, as FT.com columnist Martin Wolf has said, given the large employment dislocation caused by globalization, the United States will have to systematically review and improve its social safety net, after the financial crisis and recession have ended.
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