WASHINGTON The number of U.S. workers drawing jobless benefits hit a 25-year high this month and imports suffered a record fall in September, according to reports on Thursday that underscored a rapid drop-off in the U.S. economy.
The number of workers filing new claims for jobless benefits rose by an unexpectedly steep 32,000 last week to 516,000, the highest since the weeks following the September 11, 2001 attacks on the United States, the Labor Department said.
The number of workers still on the benefit rolls after drawing an initial week of aid hit 3.9 million in the week to November 1, the highest since January 1983.
"This is obviously very, very serious deterioration in the labor market, more than a lot of people had expected even a couple of months ago," said Scott Brown, chief economist with Raymond James & Associates in St. Petersburg, Fla.
"We are looking at the biggest financial crisis since the Great Depression and the biggest economic crisis we have had in the United States since the early 1980s."
The U.S. economy has been suffering from a housing market crash, a lack of credit and an auto industry that is struggling to survive. One source of growth through the first half of the year has been exports, but that appeared to be stalling.
U.S. exports fell at the fastest pace in seven years as the credit crunch slowed economies around the world.
Worried U.S. consumers also cut back on retail purchases for the second consecutive month in October, according to SpendingPulse data, which excludes auto sales.
Consumer spending fell 1.5 percent last month, after a 2.4 percent drop in September that was the largest since SpendingPulse started the data series in 2003.
At a time when retailers are normally beginning to gear up for the holiday season, the trade data also showed imports of consumer goods fell nearly 7.9 percent in September.
However, a drop in interest rates spurred increased interest in home loans last week as mortgage applications recovered from almost an 8-year low.
"EVERYBODY IS HURTING"
U.S. stocks finished higher in volatile trade on Thursday after three straight days of losses. Investors snapped up beaten-down shares in energy, financial and others sectors, giving stock prices a boost despite the worries about a deepening economic downturn.
The dollar weakened against the euro, but rose against the yen. U.S. government debt prices fell.
A report from the Commerce Department showed a record drop in the price of imported oil and the lowest auto imports since February 2004, factors that helped trim the monthly trade gap to $56.5 billion, slightly below the $57 billion expected on Wall Street.
U.S. imports from China hit a record $33.1 billion in September, but imports from the European Union fell 3.8 percent and imports from the Organization of Petroleum Exporting Countries slumped 27.1 percent as the cost of imported oil fell by a record $12.41 per barrel in September.
"The drop in oil price is a factor, no doubt about it. People are just not driving that much (any) more," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. "We are seeing a decline in everything -- imports and exports ... It tells me everybody is hurting."
U.S. goods exports fell by a record $10.4 billion, with all major categories showing a decline. A sharp drop in exports of capital goods was led by civilian aircraft, after posting big numbers in the two prior months.
"We should still have another strong year for exports, but the short-term trend is not as strong as we'd like," U.S. Commerce Secretary Carlos Gutierrez said. "If anything, what that says is we should help our exporters to offset that."
Congress could do its part by approving three pending free trade agreements with Colombia, Panama and South Korea, while the White House keeps pushing for an agreement in the long-running Doha round of world trade talks, he said.