NEW YORK The number of American workers on the unemployment rolls surged to the highest in a quarter century and a regional manufacturing gauge slumped as U.S. economic misery intensified, new reports showed on Thursday.
The data was the latest in growing evidence that shows the United States, like other rich nations, has probably entered one of the worst downturns in decades. Economists expect the world's leading economies to be in recession for about a year.
The number of U.S. workers filing new claims for jobless benefits jumped last week to the highest in 16 years, Labor Department data showed, suggesting next month's payrolls data will add to the 1.2 million jobs already eliminated this year.
"I think this is going to be not only a deep recession, at least in the next couple of quarters, but also a long recession," said Conrad DeQuadros, senior economist at RDQ Economics in New York.
Worse yet, the number of workers remaining on jobless benefits, or continuing claims, was the highest since December 1982, rising to 4.012 million in the week ended November 8, the latest data available, from 3.903 million the prior week.
An index of factory conditions in the U.S. Mid-Atlantic region fell to another 18-year low in November, highlighting concerns the United States could be headed for a destructive deflationary spiral.
The Philadelphia Federal Reserve Bank business activity index fell to minus 39.3 from minus 37.5 in October. A reading below zero shows contraction in the region's manufacturing.
A key measure of inflation in the survey, the prices paid index, fell to its lowest since the survey's launch in 1968.
This follows data on Wednesday showing U.S. consumer prices fell at a record pace in October, highlighting the potential for a debilitating deflationary decline in prices throughout the economy that could affect everything from wages to stocks.
THE BIG ZERO
The Fed, in a rare move, said on Thursday it would expand its December policy meeting to two days to allow more time for discussion. The meeting, originally scheduled for Tuesday, December 16, will now begin on the afternoon of Monday, December 15.
JP Morgan (JPM.N) said it expected the Fed to slash its key federal funds target rate to zero from the current 1 percent by January and that the deflation threat was growing.
"Deflation becomes more likely in an environment where labor market slack is building and ongoing financial tightening is delaying the prospect that slack begins to get worked down," JP Morgan economist Michael Feroli said in a research note.
U.S. stocks fell to their lowest in 11-1/2 years, measured by the S&P 500 .GSPC. The dollar tumbled against the yen while government bonds, which benefit from signs of economic weakness, rallied strongly.
Initial claims for state unemployment insurance benefits rose to a seasonally adjusted 542,000 in the week to November 15 from a revised 515,000 a week before, the Labor Department said. That was higher than analysts' forecast of 505,000. The four-week moving average of new claims, a smoother gauge of underlying trends, rose to its highest since 1983.
The United States was not suffering alone with grim jobs data. French carmaker PSA Peugeot Citroen (PEUP.PA) said it would cut 2,700 jobs, Anglo-Swedish drugmaker AstraZeneca (AZN.L) saw 1,400 losses over coming years and engine maker Roll-Royce (RR.L) expects up to 2,000 job cuts next year.
The Swiss National Bank made a surprise one percentage point cut in interest rates on Thursday, trying to stave off a recession as the global outlook worsens fast.
The U.S. Conference Board said its index of Leading Economic Indicators fell more than expected in October, as stock prices dropped and consumer expectations weakened.
The index fell 0.8 percent to 99.6 after rising by a revised 0.1 percent in September.
"The economy is contracting, and the pace of contraction may intensify over the next few months," said Ken Goldstein, economist at the Conference Board.