May 21st, 2009
11:57 AM ET

Financial Dispatch: Jobs picture remains bleak

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Gene Bloch
Managing Editor
CNN New York

The most important component of the economy – jobs – is still a sad story. Today the government reported that 631,000 people filed unemployment claims for the first time last week. That number is 12,000 less than the previous week, but still very high, and the number of people who continue to collect jobless benefits rose to yet another record high of 6.62 million. The stock market is now lower, largely because of concerns about the economy.

And we hate to repeat ourselves, but gas prices are up again. AAA reported a gallon of regular unleaded jumped nearly 3-cents to $2.33, the 23rd straight gain. In that time, gas is up 15%.

As states around the country face budget shortfalls – get ready for a deluge of tax hikes. Illinois is a good example, it’s considering a 50% income tax increase.

What kind of cuts will states have to make if these hikes don’t go through?

The finance arm of General Motors may be in store for a new round of federal assistance. The Wall Street Journal is reporting the Treasury Department is poised to inject more than $7 billion into GMAC, the first part of an aid package that could reach $14 billion. Treasury and GMAC are not commenting on the report, but if it happens it could make the U.S. government a majority shareholder in the company. The move comes as General Motors works toward a June 1 deadline to announce a restructuring, and a Chapter 11 filing is looking likely. Chrysler, which is already operating under bankruptcy, is also dependent on GMAC, as it now relies on the company for consumer auto loans and dealer inventory financing.

On CNNMoney:


* California budget nightmare. Gov. Arnold Schwarzenegger and other state officials face tough fiscal choices now that voters have defeated a series of budget proposals.


* A (positive) view from the showroom. Drastic dealership cuts at GM and Chrysler may have a silver lining, says one former dealer.


* Get your spouse to stop overspending. First, realize it's all about the desire for control.

Filed under: 360° Radar • Economy • Finance • Gene Bloch • Unemployment
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