Continuing Claims Continue Rising and Other News

While new jobless claims fell to 631,000, continuing claims rose yet again to 6.7 million, another record. More grim employment data.

In government bailout news, GMAC will receive a cash infusion of $7 billion, part of a package that could reach $14 billion. If you’re in the car business, which the government finds itself knee-deep in, you have to have a way to provide financing to your remaining dealers, as well as to the consumers who are supposed to buy your cars. The government needs some version of GMAC, and GMAC won’t make it without more financial help. So, now we own GMAC too. Sigh.

In depressing global economic headlines, the WSJ has a very nice chart displaying how poorly the US’s main trading partners around the world are faring. Mexico’s GDP contracted by 21.5% on an annualized basis, while Japan’s fell 15.2%, and Germany’s declined an abysmal 14.4%. These steep declines are mostly our fault, as US consumers have scaled back purchases of foreign goods due to our own economic contraction. The US’s milder yet not-insignificant 6.3% contraction shows that maybe it’s not the worst thing in the world being a net-importer of goods. We can just stop buying foreign stuff, but our trade partners who depend on us buying their stuff are suffering far worse economic fates.

Finally, in more “at least we’re not doing as poorly as they are” news, S&P lowered its outlook on the UK’s debt. The rating agency warned that the country must get its finances in order or risk losing its triple-A rating on its debt. Predictably, the FTSE and pound took a tumble. With the way the US spending coupled with the sharp decline in tax receipts, it’s hard to imagine we’re too far behind.