Unemployment: Seven-Year High

The Labor Department reported that, during the week ending September 20, initial claims for unemployment insurance rose to a seven-year high of 493,000, an increase of 32,000 from the previous week. The government estimated that the effects of Hurricane Gustav in Louisiana and Hurricane Ike in Texas added approximately 50,000 claims to the total.

Employers have cut more than 600,000 jobs since the beginning of the year, and the unemployment rate has jumped more than a point, to 6.1%. Home prices continue to fall and consumers, struggling under heavy debt and high energy costs, are cutting spending.

Many economists forecast a longer, deeper downturn, with no significant recovery until 2010. Unemployment could rise to 7% or higher, a level not seen since 1993. The turmoil on Wall Street has made credit harder to get and pushed interest rates higher, curtailing business and consumer spending.