U.S. jobless claims at 26-year high

UNITED STATES - New claims for unemployment benefits reached their highest level in 26 years last week, as companies slash workers at a rapid pace.

The Labour Department reported today that initial applications for jobless benefits in the week ending Dec. 6 rose to a seasonally adjusted 573,000 from an upwardly revised figure of 515,000 in the previous week. The Labour Department said last week that employers cut a net total of 533,000 jobs in November and the unemployment rate reached 6.7 per cent, a 15-year high.

It is also the highest reading since November 1982, though the labor force has grown by about 49% since then. Economists consider jobless claims a timely, if volatile, indicator of the health of the labor markets and broader economy. Last year, initial claims were 337,000.

The economy has been hit hard by the ongoing housing slump and credit crisis, which have sharply reduced household wealth as stock prices and home values have declined. Consumers and businesses have dramatically cut back their spending. The National Bureau of Economic Research said this month that the economy fell into a recession in December 2007.

High hopes are pinned on Barack Obama's plan for infrastructure spending in 2009 to boost the lagging economy.