Financial Dispatch: Unemployment claims slide in the right direction

Jennifer Rizzo
Assignment Editor CNN New York

The number of Americans filing for initial claims for unemployment benefits dropped by 21,000 last week to 454,000 according to the Labor Department, more than economists expected. People coming to the end of their unemployment benefits are waiting for the Senate to vote on an extension. The Senate, currently on its weeklong summer break, will be back in session July 12th. More than 2.1 million people are expected to have lost their unemployment benefits by that time.

The unemployed in America’s small towns are getting opportunities for new “onshored” jobs. Companies looking for skilled low cost labor are forgetting about India and taking a look at job hungry areas around the country for work traditionally outsourced overseas. The practice called “ruralsourcing” or “onshoring” has sparked new startups in places like Joplin, Mo., and Eveleth, Minn., where hundreds of employees crank out software code or offer IT support for large corporate clients.

Companies however are still shedding jobs. Wells Fargo announced yesterday that it will cut 3,800 employees and close over 600 branches of its financial division. The cuts come after the closing of Wells Fargo Financial, the company’s consumer finance division that was no longer needed after its 2008 merger with Wachovia.

Also on the economic front, June sales numbers for chain retailers across the country were reported today with mixed results. Most major chains however like Macy’s and J.C. Penney, posted better than expected gains.

American Eagle is hoping to jump start its back to school promotions, giving every customer who tries on a pair of jeans a free smartphone. The caveat–in order to get the free phone you must sign up for a new two year service plan from July 21st to August 3rd. Customers can choose from over 40 phones from a variety of brands including BlackBerry and Android.

Later today the government will release its report on consumer credit for May. Credit is expected to have fallen by $3 billion after rising by $1 billion in April.

And looking at the bigger picture, the International Monetary Fund warns that while the global economy grew at a stronger-than-expected pace so far this year, the risks to recovery have greatly increased. In an update of its World Economic Outlook, released Wednesday, the IMF raised its growth forecast for 2010 to 4.6% from the 4.2% estimate it made in April. However, the international organization warned that the risks to recovery have "risen sharply" due to renewed financial turbulence.