Initial Jobless Claims Rise to 8-Year High

The number of people claiming unemployment benefits for the first time shot up to an eight-year high of 519,000 in the week ended March 9, the Labor Department said Thursday, dashing hopes for a quick economic recovery now that the Gulf War is over.

The Labor Department said initial claims rose 45,000 from the previous week, hitting the highest level since the 546,000 filed during the first week of January, 1983. That was at the tail end of the last recession, the steep 1981-82 downturn.

Bush Administration officials and Federal Reserve Chairman Alan Greenspan had expressed hope that a quick end to the Persian Gulf War, by providing a boost to consumer confidence, would help ensure that the current recession would be short and mild.

However, private economists said Thursday’s report on jobless claims was not an encouraging sign.

“If this is a harbinger of what is to come, the economy may not recover as soon as anticipated,” said Michael Evans of Evans Economics Inc.

Although the Federal Reserve and most economists have projected a recovery by midyear, Evans said the latest data suggests a turnaround may not come until late summer.

“This suggests that more people are being laid off and it signifies a continuing weakening of the economy,” said Samuel Kahan, chief economist at Fuji Securities Inc. in Chicago.

Kahan cautioned that the initial jobless claims report can be volatile from week to week. But he noted that the four-week average for claims has been moving higher since December.