The American Pundit

While the left may be signing “Happy Days Are Here Again” in an attempt to convince Americans that the recession is over and the Pelosi/Obama stimulus package was successful, reality is quite a bit bleaker. For the second straight week, initial unemployment claims increased at a higher rate than analysts expected.

Claims increased to 576,000, an increase of 26,000 claims higher than analysts had predicted. The four week average has hit 570,000.

The number of first-time claims for unemployment benefits rose unexpectedly for the second straight week, a sign that jobs remain scarce even as other data show the economy is stabilizing.

The Labor Department said Thursday the number of new jobless claims rose to a seasonally adjusted 576,000 last week, from a revised figure of 561,000. Wall Street economists expected a drop to 550,000, according to a survey by Thomson Reuters.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies’ willingness to hire new workers.

The figures are volatile, and had been trending down, after remaining above 600,000 for most of this year. The new report indicates that the labor market is still weak. In a healthy economy, initial claims are usually around 325,000 or below.

Actually, things get worse. You’ll recall news earlier on that the unemployment rate had fallen, which the left took as a sign of success in their efforts to restart the economy. But the real reason behind it was “discouraged workers”: Individuals who were unemployed but have no decided to drop out of the workforce entirely. The rate didn’t go down because people were going back to work, it went down because people decided to stop looking for work.

Anyway, the Bureau of Labor Statistics now puts the number of “discouraged” workers at 796,000. That’s the highest level in a decade, with the last recession never posting a level higher than 534,000 discouraged workers. So this is no ordinary recession even for workforce drop-outs.

All of this shows that the recession is still going strong and that the $787 billion “stimulus” package, which was supposed to be timely in its creation of millions of jobs, has failed spectacularly. Employers continue to shed jobs and those who are unemployed are more and more often finding themselves simply dropping out of the workforce entirely.

Unemployment tends to have a domino effect on other economic sectors. If you lose a source of income, you’re not likely to go out and buy that new television or take the family out to dinner. You tighten the belt, purchase fewer goods and services, and squirrel money away that you’re not sending out the door for vital services. This doesn’t bode well for the rest of the economy.