Jobless-Benefit Applications Rise Again

New applications for unemployment insurance benefits rose again in late September, the Labor Department said Thursday, as the recovery remained too weak to boost employment.

Claims for jobless pay rose to a seasonally adjusted 435,000 in the week ended Sept. 28, an increase of 5,000 from the prior week.

That was a bigger jump in new applications than forecast by economists, who had expected claims of 427,000. It underlined the concern that has become apparent even at the White House over the thinness of the recovery.

President Bush this week jumped into the effort to spur the pace of economic activity by unveiling a plan for encouraging bankers to lend more money to businesses and consumers.

But critics said the “credit crunch” caused by tougher loan requirements is only part of a broader affliction that is keeping the economy from regaining its vigor.

In particular, worry about job security is keeping consumers from loosening their purse strings in an economy where purchases of goods and services fuel two-thirds of economic activity, economists say.

A consensus forecast by economists for the Blue Chip Economic Indicators was revised to show a 0.3% drop in 1991 Gross National Product, rather than a 0.2% dip.

The Blue Chip report said the recession that began in mid-1990 is over but blamed the tepid recovery on slow consumer spending.

It said causes of the slowdown include “the continued rapid repayment of the large consumer debt overhang from the spending binge of the 1980s; sharp reductions in personal interest income due to plummeting short-term interest rates as the Federal Reserve sought to stimulate housing and the purchase of major durable goods; and (most important) a decline in job security as civilian unemployment remained in excess of 6% for the past nine months and corporations continued to slash middle-management salaried positions.”

The Labor Department report showed that new jobless benefit claims are on a gradual but steady upward curve. It said the seasonally adjusted number of claims over the four-week period was 427,000, compared to 423,000 in the prior four-week period.