Jobless Claims Hit 450,000, a 9-Year High

WASHINGTON —  The number of Americans seeking jobless benefits reached its highest level in more than nine years last week as U.S. labor markets, already hurt by a sinking economy, suffered a fresh blow from the Sept. 11 attacks on the United States.

The Labor Department said Thursday that early data showed a rise of 11,000 claims just in New York, the state hit hardest after hijacked planes slammed into the World Trade Center, collapsing buildings and shutting down stock markets for days.

Several days of grounded airline flights followed by substantial cutbacks in flights also contributed to increased jobless claims among airline employees and auto workers at Michigan plants unable to get needed parts from Canada.

The Labor Department said the number of initial jobless claims rose by 58,000 to a seasonally adjusted 450,000 for the week ended Sept. 22, the highest level since July 1992, when the United States was emerging from its last recession.

After losing her job at a food concession at Los Angeles International Airport two weeks ago, Mayra Segura has applied at more than a dozen hotels and stores--with no luck. “Everywhere you go right now, it’s the same,” said the single mother of a 5-year-old girl. “Everybody’s been laid off. No one’s hiring.”

The $116 a week she receives in unemployment benefits won’t cover her $450 rent, let alone food and utilities, Segura said. She took the airport job because she thought it was stable and safe, and it offered health benefits. “I have to keep trying,” she said.

The dismal job market news further darkens the picture for the world’s richest economy, which may already have been heading toward recession before the attacks. A separate report released Thursday showed a third monthly decline in orders for long-lasting manufactured goods in August.

“It’s going to be a very difficult period and it’s going to be hardest on workers. Jobs are already being cut and the disruption of the economy is very significant,” said Mark Zandi, economist at Economy.com in West Chester, Pa.

The soft economy is going to eat into government surpluses as well, the Congressional Budget Office said Thursday as it cut its fiscal 2001 estimate of the government surfeit by $32 billion to $121 billion.

“It’s going to be a tough few months as we find out the total fallout of the tragedy of the Sept. 11 attacks,” said Kurt Karl, chief economist at Swiss Re in New York.

U.S. Treasury bond prices rose for a third straight session as the weak jobless data cemented expectations for another Federal Reserve interest rate cut next week.

So far this year, the Fed has cut rates eight times to help prop up the economy and it is widely expected to lower borrowing costs again by at least a quarter-percentage point when policymakers meet Tuesday.

Last week’s rise in claims was well above Wall Street expectations and added to the economic uncertainty expected over the next several weeks as more workers nationwide lose their jobs because of the attacks.

The Labor Department said increased joblessness in the latest data was reported in other states around the country and would likely continue for several weeks. Since the attacks, the aviation industry alone has laid off nearly 100,000 workers.

“One of the biggest economic uncertainties is whether the ongoing layoffs will mushroom and spread,” said Sung Won Sohn, chief economist at Wells Fargo.

The U.S. government has pledged $5 billion in direct aid and $10 billion in loan guarantees to keep airlines flying.

New orders for costly manufactured goods declined for a third straight month in August, the Commerce Department reported, underlining how weak the economy was even before the devastating attacks Sept. 11.

The value of new durable goods orders fell 0.3% to $180.8 billion after larger drops of 1.1% in July and 2.5% in June. Durables are items such as new cars, computers and appliances designed to last three years or more.

Commerce officials said it was the first time in more than two years--since the period from April-June 1999--that orders had fallen for three months in a row. Shipments, a gauge of current activity on the factory floor, also softened for a third consecutive month, down 1.2% in August following declines of 0.2% in July and 2.4% in June.

One bright spot last month was housing. New-home sales rose slightly in August, the government said Thursday.

The Commerce Department said new-home sales rose 0.6% to an annual rate of 898,000. However, the data for July were revised downward sharply, to a 0.8% gain and an annual rate of 893,000 from a previously reported 4.9% rise and 950,000 rate.

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Times staff writer Nancy Cleeland and Reuters contributed to this report.