Jobless Claims Reflect Slower U.S. Economy

ByJohn S. McClenahen The latest Federal Reserve System's survey of business conditions, released this week, suggests the growth rate of the U.S. economy has slowed in recent weeks. For example, reports from the 12 Federal reserve districts indicate "little to no growth" in manufacturing during July and August. The slowdown apparently continued into the week ending Sept. 7. Initial claims for unemployment insurance during the week jumped to 426,000, reports the U.S. Labor Department's Employment & Training Administration. That figure is 19,000 above the revised figure of 407,000 for the week ending Aug. 31. The Labor Day holiday last week may have pushed the number of initial jobless claims higher last week, the U.S. Labor Department speculates. But to Bruce Steinberg, chief economist at Merrill Lynch & Co., New York, a claim figure above 400,000 suggests that companies are continuing to cut payrolls. "While the corporate downsizing may boost labor productivity and profits, it raises the possibility of a downturn in the economy," Steinberg says. "Unless claims fall materially in the next few weeks, September's employment report [due to be released Oct. 4] will probably be weak."