NEW YORK – Fresh worries about widening unemployment added to investors’ list of concerns about the economy Thursday. The major indexes each fell more than 1.5 percent, including the Dow Jones industrial average, which lost 135 points.
Wall Street found fresh room for worry after new claims for unemployment benefits climbed to a 16-year high. The Labor Department reported that new applications for jobless benefits rose to a seasonally adjusted 542,000 last week from a downwardly revised figure of 515,000 in the previous week. That is well above economists’ expectations of 505,000, according to a survey by Thomson Reuters.
Fears about the job market, the housing market, the overall economy and a stock market down 48.5 percent from its October 2007 peak have led consumers to sharply curtail how much they take out of their wallets. That’s a troubling prospect for Wall Street as consumer spending accounts for more than two-thirds of U.S. economic activity.
Worries about the prospects for employment helped drive Wall Street’s decline Wednesday. The Fed projected that the nation’s average unemployment rate would rise to 6.3 percent to 6.5 percent this year and 7.1 percent to 7.6 percent next year.
The level in October was 6.5 percent, and last year the rate averaged 4.6 percent.
Early Thursday, fears about employment and the ability of the automakers to continue to stay afloat continued to weigh on stocks.
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