US jobless figures at highest level in nine years

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The Independent Online

The number of Americans signing on for jobless benefits surged to a nine-year high in the first full week after the US terrorist attacks, figures showed yesterday.

The number of Americans signing on for jobless benefits surged to a nine-year high in the first full week after the US terrorist attacks, figures showed yesterday.

A total of 450,000 made first-time claims in the week to 22 September, the highest since July 1992 when the US was emerging from recession. The figure was 58,000 higher than the previous week. Economists said it was the first sign of the impact of the US attacks, warning it was a harbinger of recession.

The data came as a leading UK employers' group, the Institute of Directors, also warned the world was "teetering" on the brink of recession.

The US Labor Department said the jobless data included an 11,000 increase in New York. Economists warned the rise in jobless claims could accelerate as an estimated 140,000 redundancies in the airline industry was fed into the data. Hugh Johnson, chief investment officer at First Albany, said the US was "either in a recession or very close".

The report came a day after the chief economist at the International Monetary Fund, Kenneth Rogoff, said a US recession was a "done deal" before retracting the remark.

Yesterday in London he said a US recession was "clearly a possibility" but added there was a "reasonable chance" of significant recovery in world growth in 2002. He said some central banks – including specifically the Bank of England – might be "happily" raising interest rates next year.

"The UK is doing very well comparatively and there are many things looking more happy in the UK, including labour market flexibility, than in Europe," he said. "There have been a lot of sharp interest rates cuts and possibly, even if there are no further cuts, there may be a case looking ahead to 2002 where central banks are happily raising interest rates."

Mr Rogoff stressed he was "talking about 2002 and not next Thursday" – the day the Bank sets interest rates. A poll of City economists found 16 out of 25 expected a quarter-point cut.

Ruth Lea, head of policy at the IoD, said the attacks had "almost certainly" tipped the US into recession. "To talk of global recession is no longer absurd and the situation looks quite the bleakest since the 1970s," she said, adding that government spending would prevent a slump in the UK.

But she said, with manufacturing and farming both in recession: "Job losses are sure to increase and that, for many people, is recession."

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