Economy

Fewer people applied for unemployment benefits last week

by Vicki Needham - 09/22/11 12:56 PM ET

After steadily dropping through late spring and summer, applications have been ticking up again, signaling the fragility of the nation’s economy and the inability of the labor market to churn out jobs.

Economists said claims for benefits need to drop below 375,000 to indicate a healthy job market, more jobs and a lower unemployment rate.

Applications fell to 375,000 in February and stayed below 400,000 for two months, before hitting an eight-month high of 478,000 in April.

To fuel an expansion, consumers need cash in their pockets, which would spur demand and lead to more hiring. That, in turn, could end the current negative cycle. Consumer spending, which accounts for about 70 percent of economic growth, is a key factor for the recovery.

Economists have said that the claims figures are in line with the economy’s expansion. In a stagnant economy, employers simply aren’t adding to their payrolls.

The unemployment rate has been stuck above 9 percent in all but two months since the recession officially ended more than two years ago.

Meanwhile, President Obama is pushing a $447 billion jobs package although it’s already getting mired in partisan bickering.

The Federal Reserve said Wednesday it will shift $400 billion out of short-term Treasury securities and into longer-term bonds in another effort to provide a boost to the economy.

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