Unemployment Benefits Increase Over July
August 10, 2007
The number of people claiming welfare unemployment benefits in the US economy grew over the course of July, according to figures released today.
The US Labor Department announced today that claims for unemployment insurance had risen to 316,000 last week, making it the highest level since the end of June.
The news comes as economic conditions in the US seem to be worsening, with both Wall Street and big business exercising caution and prudence in their affairs.
The ongoing sub-prime lending saga has created global uncertainty, prompting fears of a potential credit crunch around the world.
A credit crunch, where banks are less likely to lend money through liquidity problems to other banks, businesses and consumers, is projected unless drastic recovery measures are initiated in the US housing market.
The potential for a credit crunch is thought to be the reason behind abysmal consumer spending in the US, and the ongoing lack of new home buying nationwide.
With the potential for recession in the global economy on the cards, the European Central Bank and the Federal Reserve plunged money into banking sectors, which has seen major share sell-offs and diving market confidence.
It is thought that tightening credit could be behind the increasing job cuts in the US, whilst the lack of consumer spending is thought to be a derivative of both credit crunch fears and increasing lay-offs.
The struggling auto industry, aside from the housing market, is thought to be one of the main contributors to increasing job cuts, whilst the number of state unemployment benefits paid out in the last week in July rose to over 2.55 million in the worst week of the month.
Chairman of the Federal Reserve Ben Bernanke has suggested that the resilience of the labour market and economy as a whole will ultimately see it through in spite of poor economic indicators.