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The New Economy

Unemployment claims jump: latest sign that recovery will be slow

Unemployment claims rose an unexpected 24,000 to their highest level in nearly two months. The number of foreclosures in March was nearly 20 percent higher than the month before. Will the recovery be slower than Wall Street thinks?

By / April 15, 2010

Job seekers watched themselves in a mirror while waiting in line to attend a career fair presented by National Career Fairs in San Jose, Calif., last month. The number of laid-off workers making first-time unemployment claims for benefits rose an unexpected 24,000 last week, the latest sign that the recovery will be slow.

Eric Risberg/AP/File

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Wall Street seems convinced that a strong recovery is under way, but signals from the real economy suggest that the rebound will be far more subdued.

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The latest evidence: first-time claims for unemployment benefits. Last week, 484,000 Americans filed their initial claim, a jump of 24,000 over the previous week and the highest level in nearly two months, the Labor Department reported Thursday.

The closely watched four-week moving average, which smooths the volatile weekly number, also moved up to 457,750, its highest level in one month. This marks the second time since the great recession began that the average moved below 450,000 only to rise above that level again.

Foreclosures also reached new highs last month, RealtyTrac reported Thursday. They rose 19 percent over February's level to more than 367,000 properties, the highest monthly total since RealtyTrac began reporting on foreclosures in 2005.

"Overall economic activity increased somewhat," the Federal Reserve's survey of regions, known as the Beige Book, concluded Wednesday. Fed Chairman Ben Bernanke echoed that view of a moderate economic recovery in his congressional testimony Wednesday.

These reports don't suggest that the economy will dip into recession again. The foreclosure report, for example, shows that filings surged for bank repossessions, the final phase of the process.

The data "may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline,” James Saccacio, chief executive officer of RealtyTrac, said in a release.

The prospects of a double-dip recession also appear to be fading. Instead, these most recent economic reports may be signaling that growth in the coming months will be slower than Wall Street appears to believe.

On Wednesday, the Standard & Poor's 500 index surged above 1200 for the first time since September 2008. The stock market has been on a two-month tear, with the S&P 500 rising more than 14 percent since Feb. 8.

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