THE number of US workers signing up for unemployment benefits and leaving non-farming payrolls has risen sharply for the second consecutive week.
The US Labour Department reported that new claims for jobless benefits increased by 24,000, to a seasonally adjusted figure of 484,000, in the week ending April 10. This was significantly greater than economists’ forecasts of 450,000.
This is despite the hiring of a million unemployed workers to take part in getting the information for the US census.
Ian Shepherdson, chief economist at High Frequency Economics, admitted that ‘Any sustained reversal of the downward trend in claims would be a huge shock.’
In fact, industrial production only edged upwards last month by 0.1 per cent, matching the February figure.
The ‘gain’ was much smaller than expected due to a 6.4 per cent fall in utilities output as milder weather replaced a harsh winter.
Also, US house repossessions have hit a five-year high, the number of homes repossessed by the banks rising by 35 per cent in the first three months of the year.
Banks seized 254,944 houses and flats, spelling out the misery that rising unemployment combined with wage cuts is producing.
The rate of foreclosures rose by 16 per cent in the first quarter.
Ten states, including what was the most prosperous area on the planet, California, provided more than 70 per cent of the foreclosures that were filed in the first quarter.
This situation, where the US is not out of the slump, and is being dragged along the bottom, has forced the chairman of the US Federal Reserve Bank, Ben Bernanke to admit that the US faces ‘very tough choices’ to cut the country’s massive deficit.
In his recent comments to the Joint Economic Committee of the US Congress, he said that action could not be delayed and that the collapse of the construction sector was weighing heavily on the US economy.
He advised: ‘Addressing the country’s fiscal problems will require difficult choices, but postponing them will only make them more difficult.’
He added: ‘Significant restraints on the pace of the recovery remain, including weakness in both residential and non-residential construction and the poor fiscal condition of many states and local governments.’
He was referring to the fact that the majority of US states and local governments are bankrupt, even once super-rich California.
One of his particular concerns was that in March 44 per cent of the unemployed had been without a job for six months or more, after some 8.5 million jobs have been lost in the recession so far.
The record-breaking US balance of payments debt and the gigantic national debt require higher interest rates, but carrying out this policy would deliver the knockout punch to a weakening economy and condemn the US to a deeper slump.
US economists say that a rise in interest rates is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession.
‘Americans have assumed the roller-coaster goes one way,’ said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of US government debt, which has pushed up interest rates.
Nine months ago, United States government debt accounted for half of the assets in Pimco Total Return. That has shrunk to 30 per cent now — the lowest ever in the fund’s 23-year history — as Gross has sold American bonds in favour of debt from Europe.
Gross manages over $1 trillion at Pimco.
The prospect for US workers is that the attacks on their jobs, wages, pensions and healthcare will greatly intensify.
The only solution is to break with the Democrats, defend jobs through the occupation of the factories, and build a Labour Party to fight for the expropriation of the bosses and bankers, and a socialist USA.