Housing, job figures negative

Reports reflect chronic woes

6/24/2011

WASHINGTON -- Sour reports Thursday on the number of people who sought unemployment benefits and buyers of new homes illustrate what Federal Reserve Chairman Ben Bernanke acknowledged this week: Many factors weighing on the economy are proving to be more chronic than first imagined.

The poor housing and employment data contributed to a bleak day of economic news. The European Central Bank chief also renewed warnings about Europe's debt crisis and stocks tumbled.

"We have had a worrisome string of soft numbers which is painting a fairly bleak picture of the recovery," said Sal Guatieri, senior economist at BMO Capital Markets. "The labor market is weakening according to the jobless claims numbers, confidence appears to be slipping among households, and small businesses and home sales are still very depressed."

Applications for unemployment benefits rose last week by the most in a month, a sign that layoffs remain elevated. Applications jumped by 9,000 to a seasonally adjusted 429,000 last week, the Labor Department said Thursday. It was the second increase in three weeks and the 11th straight week that applications have been above 400,000.

New-home sales fell in May to a seasonally adjusted annual rate of 319,000, the Commerce Department said. That's far below the 700,000 homes per year that economists say must be sold to sustain a healthy housing market.

Housing remains the weakest part of the U.S. economy, analysts say. Sales of new homes have fallen 18 percent in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century.

Analysts said that the reports served to highlight the Fed's decision this week to cut its economic outlook for growth and employment this year.

It also supports worries expressed by Mr. Bernanke that many of the economy's troubles could last into next year.