According to an article in the Star-Telegram, the number of unemployed workers claiming unemployment benefits rose last week as retail sales weakened. The Labor Department reported 558,000 initial unemployment insurance benefits claims last week, an increase from 554,000 from the previous week. Analysts had hoped that the new unemployment insurance benefits claims would drop to 545,000; but the new numbers and a 0.1 percent decrease in retail sales have dampened their hope for a quick recovery.
The article said:
"There is really no positive spin to put on these numbers," Jennifer Lee, an economist with BMO Capital Markets, wrote in a research note. "The U.S. consumer remains very weak. The jobs situation, while slowly improving, is still dismal."
Lee's assessment is unfortunately accurate. The dismal unemployment numbers and depressed retail sales are creating a vicious cycle that's fueling corporate downsizing, residential and commercial foreclosures and bankruptcy. As retail sales decrease, businesses are forced to lay off part of their workforce. And as workers face job losses, many are forced into foreclosure and/or bankruptcy. This domino effect is having devastating consequences in the real economy as even those people with jobs cut back on spending for fear that they will be the next person to face a job loss.