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Gov't to report on jobless claims as layoffs rise

(Agencies)
Updated: 2009-01-29 15:58

WASHINGTON -- The government will provide a snapshot of the battered labor market Thursday when it reports how many people filed first-time claims for jobless benefits last week.

Economists forecast that about 575,000 initial claims were filed, down from 589,000 the previous week. Still, last week's figure matched a level hit in November that was the highest in 26 years, although the labor force has grown by about half since then.

The Labor Department's report comes as large corporations from virtually all sectors of the economy are announcing massive layoffs.

The latest to do so is Starbucks Corp., which said Wednesday that it would cut 6,700 jobs. The coffee company also said it would close 300 underperforming stores, on top of 600 it already planned to shut down.

Time Warner Inc.'s AOL division said Wednesday that it is cutting up to 700 jobs, or about 10 percent of the online unit's work force. IBM Corp., meanwhile, has cut thousands of jobs in its sales, software and hardware divisions in the past week, without announcing specific numbers.

Boeing, Pfizer, Home Depot and other US corporate titans have announced tens of thousands of job cuts this week alone.

Companies have announced more than 125,000 layoffs in January, according to an Associated Press tally.

The economy is likely to continue to shed jobs for the rest of this year, even if an economic stimulus bill pushed by President Barack Obama is approved, economists said.

Meanwhile, the Labor Department said Wednesday that layoffs involving 50 or more workers increased sharply last year.

The department reported that 21,137 mass layoffs took place last year, up from 15,493 in 2007. That's the highest annual total since 2001, the last time the economy was in recession, and the second-highest since the department began tracking mass layoffs in 1995.

More than 2.1 million workers were fired as a result of last year's mass layoffs, the department said.

The financial markets, meanwhile, rose Wednesday on news that the government may take additional steps to assist the nation's ailing banks. The Dow Jones Industrial average rose nearly 201 points, or about 2.5 percent, to 8,375.45.

Still, the current recession, which began in December 2007, likely will result in greater job losses than any downturn since the late 1950s, said Adam York, an economic analyst at Wachovia Corp.

Total employment will drop by 3.5 percent by the end of this year, a sharper decline than the 3.1 percent fall that took place during the steep 1981-1982 recession, York said. Employers cut 2.6 million jobs last year and will likely eliminate more than 2 million this year, he said.

Obama sought to use the mounting employment losses to ramp up support for his $825 billion economic stimulus package, which the Democratic-controlled House approved Wednesday night. The vote was 244-188, with Republicans unanimous in opposition despite Obama's frequent pleas for bipartisan support. The vote sent the bill to the Senate, where debate could begin as early as Monday on a companion measure already taking shape.

"These businesses that are shedding jobs to stay afloat -- they cannot afford inaction or delay," Obama said Wednesday. "The workers who are returning home to tell their husbands and wives and children that they no longer have a job, and all those who live in fear that theirs will be the next job cut, they need help now."

Meanwhile, the Federal Reserve acknowledged Wednesday that the economy is continuing to deteriorate and signaled it would use unconventional tools, such as buying longer-term Treasury securities, to cushion the fallout. Such a move could help drive down mortgage rates and provide help to the stricken housing market, economists said.

The Fed also kept the key interest rate it controls at nearly zero and said it would remain at that level for "some time."

Many other companies announced large layoffs this week, including Caterpillar Inc., Sprint Nextel Corp., Target Corp., Corning Inc. and chemical company Ashland Inc.