Number of Americans filing for state unemployment benefits rises to a 26-year high of 586,000, according to Labor Department.
NEW YORK (CNNMoney.com) -- The number of Americans filing for first-time unemployment benefits rose to a 26-year high last week, according to a government report released Wednesday.
The Labor Department said that initial filings for state jobless benefits rose to 586,000 for the week ended Dec. 20. That was an increase of 30,000 from the 556,000 revised figure for the prior week, and up from a recent high of 575,000 claims reported earlier this month. Wednesday's report revealed the highest number of jobless claims since Nov. 27, 1982 when initial filings hit 612,000. Economists were expecting jobless claims to rise to only 558,000, according to a poll by Briefing.com.
This week, the report was released a day early due to the Christmas holiday on Thursday.
The weekly jobless claims report can give economists one of the most up-to-the moment reads on the state of the U.S. economy. And the increasing number has some worried that consumers may further tighten their wallets.
"It's likely to get worse before it gets better," said Carl Riccadonna, senior U.S. economist with Deutsche Bank.
In fact, consumer spending fell for the fifth straight month in November, according to the Commerce Department.
"Without consumers turning around, the economy's not going to turn around," Riccadonna said.
Over the past four weeks, new unemployment claims have risen to an average of 558,000 a week, up 13,750 from the revised moving average of 544,250 reported last week.
The four-week moving average is designed to smooth out some of the week-by-week fluctuations in initial claims statistics, and give a broader view of the U.S. job market.
The number of people continuing to collect unemployment declined to 4.37 million in the week ended Dec. 13, the most recent data available. The measure was a decrease of 17,000 from the preceding week's revised level of 4.39 million.
Over the previous four weeks the number of people on unemployment averaged 4.32 million a week, the government said.
The number of new jobless claims rose the most in Oklahoma, rising by 1,590, the Labor Department said.
North Carolina saw jobless claims fall the most, by 20,526, due to fewer layoffs in the construction, manufacturing and materials industries.
A weak economy causes companies to layoff workers, which causes people to tighten their spending, which weakens the economy even further.
It's a "negative feedback loop," said Riccadonna, and one of the only things that can get us out of it would be a "'shock and awe' fiscal stimulus package" from the federal government.
President-elect Barack Obama said last week his administration would try to generate 3 million jobs over the next two years as part of an economic stimulus plan that some economists estimate could cost as much as $800 billion.