January 22nd, 2009
11:22 AM ET

Financial Dispatch: Unemployment picture gets worse

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Andrew Torgan
CNN Financial News Producer

The number of Americans filing for first-time unemployment benefits rose by 62,000 to 589,000 last week - a 26-year high. The last time jobless claims were this high was in November 1982, when jobless claims surged to 612,000. The increase is partly due to a backlog of claims that piled up in recent weeks in several states that experienced computer crashes due to a crush of applications. The number of people continuing to seek benefits, meanwhile, rose by 97,000 to 4.6 million.

And the cuts just keep on coming… Microsoft says it will cut up to 5,000 jobs over the next 18 months - including 1,400 jobs today. Chemical maker Hunstman Corp. plans to cut 1,175 jobs, or 9% of its workforce by the end of the year. Williams-Sonoma said late Wednesday it plans to cut about 1,400 jobs, or 18% of its full-time staff by end of this month. And chipmaker Intel said its cutting production at two silicon wafer facilities in the U.S. and closing three facilities in Asia, affecting between 5,000 and 6,000 workers.

New-home construction plunged to an all-time low in December, capping the worst year for builders on records dating back 50 years. The Commerce Department says construction of new homes and apartments fell 15.5% to an annual rate of 550,000 units last month. That shattered the previous low set in November. And building permits - a barometer of future activity - dropped 10.7% from the previous month.

Stocks opened lower today, weighed down by those jobless and housing numbers – and disappointing quarterly earnings from Microsoft that came out earlier than expected. With the ongoing recession and widespread damage in the banking and financial sectors, Wall Street has been dreading this earnings season. But the tech sector seems to be showing a few surprising pockets of strength. IBM beat quarterly estimates Tuesday and offered an upbeat outlook for the year. And late Wednesday it was Apple’s turn to beat the street – thanks in part to record-setting iPod sales. Now, Wall Street waits for result from Google after today’s closing bell.

Electronics and entertainment giant Sony warned today it will post a nearly $3 billion annual operating loss - its biggest loss ever and the first in 14 years - due to sliding demand, a stronger yen and costs to restructure its ailing electronics operations.

Gas prices rose 0.2 cents overnight to $1.850 a gallon. That’s the 9th consecutive increase. 5 states have regular unleaded gas prices of $2 and higher. The highest gas prices are in Alaska ($2.509). 45 states and the District of Columbia have regular unleaded gas prices below $2. The cheapest gas prices are in Wyoming ($1.490)

And be sure to check out Fortune’s 2009 list of the “Best Companies to Work For.” There's a new No. 1 this year as Google slips to No. 4. Find out which companies are going out of their way - even in this economy - to please employees.

Filed under: Andrew Torgan • Economy • Finance • Gas Prices • Oil • Wall St.
soundoff (12 Responses)
  1. Gina Kleijn

    Maybe the "no child left behind" money should have been directed toward all the so-called elite Business Schools such as Wharton. I don't know what they have been teaching their students, but it certainly does not appear to be anything resembling intelligence let alone morality!!!
    If they were judged like our elementary and high schools are, they would receive FAILING GRADES. And now our new administration has appointed one of these morons Treasury Secretary. He can't even do his own taxes!!!!!!!! God help us all

    January 22, 2009 at 3:30 pm |
  2. Ardis

    We need to figure out a way to get us all working again. These companies sending jobs overseas are only lessening potential customers here. The more of us who are unemployed and no longer purchasing goods, the more business will be laying off even more employees or totally closing down. Maybe our elected officials will finally start working together for the betterment of our country.

    January 22, 2009 at 2:33 pm |
  3. earle,florida

    I would like to add one thought,or suggestion for the Obama Economic team to consider. Would it not make sense for them to bolster their economic team with past Sec. of Treasury Paul O'Neil [1-20-2001 thru Nov.2002 (Bush#43 Administration)],and Mr Lawrence Lindsey ,Director of Nat'l Economic Council & Assistant to the President (Bush#43) on Economic Policy for the US President [1-20-2001 thru Nov.2002]. I have a great deal of respect, and admiration for these brillant ,and highly ethical individuals. PS Remember this,they were fired for exposing the cost of the Iraqi War, and questionable tax cuts (loss of revenue) unnecessarily given to the upper echelon.

    January 22, 2009 at 2:13 pm |
  4. Mary V., Salt Lake City, UT

    Yes, terrible. BUT...... the majority of Americans still have jobs. The bad news, is true, but we have a crisis of confidence. The media, especially CNN, have a responsibility to report some GOOD NEWS also! Please, tell America that the..........

    Majority of us are paying our bills!

    Majority of us have homes and are not foreclosing!

    Majority of us DO have jobs!

    Its time for hope, faith and believe that we CAN get through this, and we WILL return our Nation to ........PROSPERITY!

    January 22, 2009 at 2:10 pm |
  5. david /coon rapids

    i would like to thank the young people (our children) who are about to enter the job market for the great sacrifice you will be enduring. obama and the democrates in congress are placing a huge burden on your shoulders. you see the money they are about to spend will need to be paided back with interest by someone – that someone will be you. instead of enjoying life as we (your parents) did, you will be forced because of massive spending programs into paying higher and higher taxes, in a job market punished by environmental regulations with fewer and few high paying jobs. the reward for your sacrifice will be a slowly deminshing way of life and prosperity.
    again on behalf of president obama and the democrates i would like to say – THANK YOU

    January 22, 2009 at 1:53 pm |
  6. JC- Los Angeles

    If California is any indication of the real unemployment numbers, it should surprise no one to eventually see almost fifteen percent unemployment.

    California was artificially kept afloat by 100% pure uncut American mortgage fraud which led to unprecedented employment numbers and skyrocketing real estate values.

    While Greenspan failed to grasp the instant gratification, glutonous consumption mindset, the CEOs of the mortgage fraud factories of Countrywide, Bank of America, WAMU and Wells Fargo certainly did not.

    Now with the fraud revealed, the financial markets collapsed and the government unable to sweep everything under Bank of America's carpets, the true numbers will be revealed and 15% should be about right.

    January 22, 2009 at 1:51 pm |
  7. Gene Penszynski from Vermont

    Mr. Torgan,
    One comment please. Explain how any of this Wall Street nonsense has anything to do with REALITY other than that peoples life savings and lives are being manipulated and destroyed by the money changers in 'the temple'. This has got to be the Worlds largest Ponsi scheme by far. I just can't believe there are so many folks getting advanced degrees in making things up to explain these market fluctuations while millions are litterally one step away from not being able to live even on Rung #1 of Maslows Hierarchy of needs.

    As I mentioned in another post the whole structure is rotten to the core. Some One or Some Event is sooner or latter going to kick in the door to this house of il-repute and the whole rotten structure is going to come tumbling down and along with it the world economy and 'civilization' as we know it.

    You know, In the long run THAT may be the very best thing that could ever happen to the human race.

    January 22, 2009 at 1:48 pm |
  8. melanie

    i am outraged! i get calls form banks saying due to the bail out we can help you with your home loan yet when i dig deeper i have to be current on my payments (i am not) and if i was current i would be CHARGED for the service. this is just more proof that the bail out was a useless waste of my hard earned tax dollars. it makes me question why i even pay taxes is it used on roads? no howbout schools? no because if it was we would not be in the deep dodo with broken bridges and low test scores. i sent this to the prez via his whitehouse.gov web site i am sure i will not be heard because i am not rich or famous. just a reg. hard working joe.

    January 22, 2009 at 12:45 pm |
  9. Thom from Alexandria, VA

    You know, I just don't see how it is possible, that the economy can go from strong and growing stronger to a near total collapse in less than five months. Surely our leaders would not lie to us?

    The truth is the country has been in a recession since 2005, however the real estate boom spread a thin veneer of stability over an otherwise faltering market. Consumers relied on the boom to stay afloat, using their equity like an ATM. They pulled money out of their homes and, rather than reinvesting it into their property, they bought new TVs and cars and vacations.

    By the time the Bush stimulus package rolled around, people used that to pay down credit card debt that had built up as a means of closing the gaps between the rising costs and stagnant salaries.

    Without all of that spending the economy would have tanked three years ago.

    January 22, 2009 at 12:37 pm |
  10. Joanne, Solvay, NY

    When people are losing jobs, and their homes have depreciated while mortgage gouging has taken away their ability to, and lawyers advertise bankruptcy and divorce, DUI and the car dealers are buying up advertising space on every type of media, why does it surprise anyone that the economy is tanking?

    January 22, 2009 at 12:30 pm |

    It's time for Americans to get back to the basics to help the economy recover. We feel the job market at this point shouldn't be solely focused on those who've obtained an education, but on those who are willing to work. Our experience as average Americans tells us that people without an education will work if given the opportunity. Many jobs within private industry discriminate against these groups of people that will help bring the economy back. Many of these workers live in poverty and aren't able to pay taxes or purchase consumer goods such as autos, real estate, clothing, electronics, as well as keeping their rent paid. If the government creates an employeement program aimed at young, urban, dependable men & women that focuses on labor and hands-on skills; many more consumers will be able to contribute to the economy. By more consumers purchasing goods, private industry will see growth, thus creating more jobs and a stable economy. We believe that simply throwing money at banks, corporations, and tax payers will not give the economy the stimulus it needs, and it's not a dependable option. We believe that government investment into the job market will do the trick. Qualifications such as low-income, government-aid, involvement in the judicial system, child support claims, and unemployeement will give you an advantage for these government jobs. Because America does not rank at the top in graduation rates or technology, more jobs need to be available for those without an education. By government investing first, banks and small businesses will follow with confidence. This could be one of the solutions that America is looking for, to help get the economy back on track and grow!

    January 22, 2009 at 12:07 pm |
  12. Annie Kate

    Are we sure we are just in a recession? Numbers that large and scary look like its worse than a recession. I don't envy Obama and his economic experts the task of getting the economy on a sound basis again but I sure hope they can do it.

    January 22, 2009 at 12:02 pm |