U.S. Economy Is Showing More Signs Of Weakening
The U.S. economy showed further signs of slowing, particularly with Thursday's report that the jobless ranks continued to swell last week.
In other economic news, major retailers reported sluggish sales for January, while pending home sales fell more than expected.
The reports arrived as the U.S. Senate tried to put the wraps on a $150 billion-plus package to stimulate the economy and markets speculated that the Federal Reserve will continue to slash
interest rates to stave off a recession.
"We are in a recessionary band for jobless claims," said Lindsey Piegza, market analyst for FTN Financial.
New applications for U.S. unemployment benefits fell by 22,000 last week, but the number of workers remaining on jobless aid rose to its highest level in more than two years, government data showed.
Retailers also reported results that suggested the economy was sliding.
Wal-Mart Stores reported a lower-than-expected 0.5 percent rise in its January sales at U.S. stores open at least a year, blamed in part on winter storms in the Midwest.
The world's largest retailer also said it expects U.S. same-store sales in February to be between flat and up 2 percent.
Limited Brands , which owns Victoria's Secret and Bath & Body Works, said same-store sales dropped 8 percent in January and forecast a drop for February, citing decreased mall and store traffic.
Gap , Target and J.C. Penney were among the other big store chains reporting disappointing results.
The growing ranks of unemployed may be contributing to the downtrend, analysts said. The number of workers filing first-time claims edged down to 356,000 from 378,000 for the
previous week, the Labor Department said. The weekly figure exceeded the 340,000 economists expected.
It left the number of people remaining on benefit rolls at its highest level since October 2005 in the aftermath of Hurricane Katrina, and some forecast further employment declines as layoffs gain momentum in a deepening downturn.
"In this environment, simply cutting back on hiring will not be enough for companies to maintain earnings as demand slows; jobs will have to be cut too," said Ian Shepherdson, chief U.S. economist for High Frequency Economics in Valhalla, New York.
The Senate continued to work on the stimulus package on Wednesday. Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said he was "quite confident we'll get this resolved quickly."
The economic downturn was triggered by a rising level of failures on subprime mortgages and falling home prices. A government official meeting with analysts on Thursday cautioned
patience in forecasting an economic turnaround, even with the rate cuts and stimulus package.
"Housing corrections take time," Robert Steel, U.S. Treasury undersecretary, told an event sponsored by the New York Association of Securities Analysts.
Housing starts are forecast to fall 20 percent in 2008, according to a report from the National Association of Realtors on Thursday. The group also said its index of pending home sales for December fell 1.5 percent, slightly more than economists expected.