[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/07/09/art.job.seekers.jpg caption="New claims for jobless benefits fell 52,000 last week."]
CNN Financial News Producer
The number of Americans filing new claims for unemployment benefits last week fell to lowest level since early January, while continuing claims jumped to a record-high.
New claims for jobless benefits tumbled by 52,000 to 565,000 - well below analysts' expectations.
However, analysts said last week's drop was distorted by a change in the pattern of seasonal layoffs in the automotive industry. Initial claims typically spike in July as automakers idle certain manufacturing plants, and the Labor Department adjusts its data for such seasonal factors.
Meanwhile, the number of people continuing to receive unemployment insurance for one week or more unexpectedly jumped by 159,000 to 6.88 million, an indication that the labor market remains weak.
Govt. watchdog: Stimulus spending short-sighted
Fiscally-stressed states trying to survive one of the worst economic downturns since the Great Depression are using their stimulus dollars to satisfy immediate needs rather than undertake longer-term reforms, according to a government report released Wednesday.
For example, states are spending education funds to prevent layoffs and maintain programs, a Government Accountability Office report found.
State and school district officials say they don't have the money to undertake projects such as building new schools and expanding early-childhood education.
Similarly, states are using nearly half their infrastructure funds for pavement improvements, which can be implemented quickly and don't require environmental clearances and in-depth design work.
Wall Street wavers
Stocks on Wall Street opened higher, boosted by Alcoa's smaller-than-expected quarterly loss that the aluminum giant posted after Wednesday’s closing bell.
But the blue chips soon began to struggle on weakness in biotechs and financials.
Stocks fought off losses to end mostly higher Wednesday, but the trend has remained downward since mid-June as investors have stepped back after a 40% rally off the March 9 lows.
Nine firms to run ‘toxic asset’ program
The government on Wednesday tapped nine financial firms to manage a scaled-down program aimed at helping the nation's banks shed their “toxic assets” and said it would invest up to $30 billion to get it started.
Among those selected to serve as asset managers of the so-called “Public-Private Investment Program” were BlackRock, AllianceBernstein, Oaktree Capital Management, Invesco, Angelo, Gordon & Co., Marathon Asset Management, RLJ Western Asset Management, The TCW Group and Wellington Management Company.
The firms, selected from a pool of more than 100 applicants, will have 12 weeks to raise $500 million of capital each from private investors willing to invest in toxic securities held on banks' books. Those investments will be matched by the Treasury Department and supplemented with debt financing from the agency.
Consumers trim borrowing
Consumer debt fell in May for the fourth straight month, a government report said Wednesday.
The reduced borrowing comes as job losses and pay cuts have limited consumer spending power. At the same time, banks have tightened lending standards due to growing concerns about default risks in a battered economy.
Total consumer borrowing fell by a seasonally-adjusted $3.22 billion, or a 1.5% annual rate, to $2.52 trillion in May, according to the Federal Reserve. The report measures how much debt consumers have outstanding.
Gas prices down for 18th straight day
Gas prices dropped 1.3 cents overnight to $2.580 - the 18th straight day of declines.
In the last 18 days, the average price has decreased 11.3 cents, or 4.1 percent. The average price of a gallon of gas is also down $1.534, or 37.2 percent, from the record high price of $4.114 that AAA reported on July 17, 2008.
The highest gas prices are in Hawaii ($3.299). The cheapest are in Missouri ($2.349).
Can't pay your doctor? Charge it
Finally, as medical bills pile up, more Americans are paying their doctors with plastic.
Americans spend an estimated $294 billion on annual out-of-pocket medical costs annually, to cover everything from doctor's office co-payments to surgeries and prescription medications.
About 25% of that - around $74 billion - is already being charged to regular standard credit cards. And one consulting firm expects that $150 billion worth of health care expenses will go on credit cards by 2015.
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