Last week there was a higher than anticipated number of people who filed for unemployment benefits. In fact, there were 374,000 jobless claims for the week ending Aug. 25. This leads some to believe that the labor market is continuing to not do too well in an already struggling economy.
Additionally, at the same time when people are seeking unemployment benefits and the unemployment rate climbed to an 8.3 percent high, consumers are starting to spend more and more. According to the Commerce Department, consumer spending increased 0.4 percent in July. This was the first time since June that a change has been seen in consumer spending.
In terms of the unemployment rate, plenty of Americans are frustrated and worried as the rate has stayed hovering around 8 percent since February. This is the first time since World War II that the rate has remained this high for this long.
All around, an increased in spending combined with a high unemployment rate can spell disaster for some. For while some who are spending more could be some of the 163,000 workers who were added last month to the workforce, plenty of others could be those who are severely behind on bills and having to use credit card in order to make payments and pay for every day expenses. The problem with this though is that this type of plan can only last for so long.
Looking to the future, sources point to the fact that the jobless claims may remain high as many companies are concerned about taxes rising and cuts to government spending.
Source: Bloomberg, “Jobless Claims in U.S. Unchanged Last Week At One-Month High,” Lorraine Woellert, Aug. 30, 2012
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