By Dustin Weaver - 08/19/10 04:12 PM EDT
A new Labor Department report that shows an unexpected jump in jobless claims may be the death knell for the White House’s “recovery summer.”
The Department of Labor announced seasonally adjusted applications for unemployment insurance increased to 500,000 last week, the highest level for the claims since mid-November.
The Dow Jones Industrial Average fell more than 150 points Thursday morning after the claims report was released.
Jobless claims have increased four of the past five weeks, providing strong evidence that employers aren’t hiring amid the weak economic recovery. The modest job growth in recent months has been reflected in the national unemployment rate, which has held steady at 9.5 percent since June.
The weak job numbers are raising fears that the private sector may actually cut more jobs than it adds in August, which would likely cause the unemployment rate to rise. That scenario would be a political blow to Democrats, who fear Republicans will ride a wave of voter discontent on the economy to majorities in the House and Senate this fall.
An NBC/Wall Street Journal poll in early August showed that two-thirds of voters think the economy has yet to hit rock bottom, and an increase in the unemployment rate would likely reinforce that perception.
The Obama administration had hoped to gain some momentum on economic issues heading into the midterm elections. The White House launched a six-week “recovery summer” campaign in mid-June to tout the achievements of the $787 billion economic stimulus, which officials said saved and created millions of jobs.
But a slew of disappointing economic reports this month have made it difficult for the administration to argue that progress has been made in the effort to bounce back from the worst downturn since the Great Depression.
In early August, the Labor Department reported that the U.S. lost 131,000 jobs in July as the government laid off temporary workers who were hired to conduct the Census. The private sector added a modest 71,000 jobs that month.
Around that same time, the government said the U.S. trade deficit expanded to $49.9 billion in July as exports fell 1.3 percent — the largest drop since April 2009, and a disconcerting sign of weakness in the manufacturing sector.
Meanwhile, the nation’s housing market has remained woeful. Rates on 30-year fixed mortgages dropped to 4.42 percent this week, the lowest level since Freddie Mac began tracking the statistic in 1971. RealtyTrac reported last week that foreclosures in the U.S. topped 300,000 in July, the 17th straight month of declines.
At a backyard roundtable on economic issues in Ohio on Wednesday, President Obama admitted the recovery isn’t happening fast enough.
“We're not going to get all 8 million jobs that were lost back overnight,” Obama said. “It's going to take some time. And a lot of it's sort of like recovering from an illness. You get a little bit stronger each day, and you take a few more steps each day. And that's where our economy's at right now.”
An Associated Press/GfK poll released on Wednesday found that only 41 percent of Americans approve of Obama’s handling of the economy, the lowest level of support yet recorded in the survey.