In which Reuters reverts back to its favorite word for bad economic news: “unexpectedly”.

Initial claims for state unemployment benefits increased 31,000 to 473,000, the Labor Department said on Thursday. That compared to market expectations for 430,000.

Unemployment won’t be back down to a pre-recession level for years. And instability caused by the climbing deficit, the nationalization of companies by the federal government, the prospect of higher taxes and more regulation, and the failed $800 billion+ stimulus legislation aren’t helping.

Oh, and inflation? On the rise.

Another report from the department showed prices paid at the farm and factory gate rose a faster than expected 1.4 percent from December after a 0.4 percent gain in December, as higher gasoline prices and unusually cold temperatures helped boost energy costs.

But let’s keep printing money and interfering in the free market.

“The bottom line is that the Fed is going to have some decisions to make at its next meeting, since it seems inflation is now back on the table,” said Lancz.

Fed officials, keeping an eye on how quickly the recovering economy absorbs the excess slack that built up during the recession, have said they are likely to keep interest rates extraordinarily low for “an extended period.”

Also, you should stop banging your head against the wall if banging your head against the wall hurts.

Did anyone in the federal government see this coming? My experience in economics is limited to household budgeting, yet even I knew inflation was going to rise in this atmosphere.