Foreclosures and Unemployment Are Vying with Each Other to Create Mayhem

Foreclosures and Unemployment are vying with each other to further add to the chaos and mayhem. The latest figures show that the numbers receiving unemployment benefit jumped to an all time peak of 5 million. The new claims for joblessness remains much above 600,000. Figures also show that inflation (wholesale level) suddenly surged in January due to high prices of gasoline and other energy related products.

According to the Labor Department the new applications for unemployment benefits counted to 627,000 in the third week of February. It was more than the figure quoted by economists. The number of those on the receiving rolls crawled up to 4.99 million. This is the fourth running week that the figures have been so high.

The index of Conference Board (based in New York) predicts that it will be flat. The index is a pointer to the economic activity expected during the forthcoming three to six months. It is calculated on the basis of 10 economic ingredients that includes the prices of stocks, permits for buildings and the new unemployment benefit applications.

Last Wednesday the Federal Reserve gave out warnings that the condition of the economy is even worse than what had been thought of and forecasted. It would depreciate all through this current year of 2009. There are no indications of the housing market getting stable. The bleak estimate by the Feds predicted that unemployment would crawl up beyond 8.8% and that the economy would shrink for full one year. This would be first time since 1991.

The latest predictions by the Federal Bank came just hours before another report showed that new home building activity fell to an all time low during the previous month. The only silver lining that the economists could see was that the number of unsold houses would reduce and help the ultimate recovery of the housing market.

The reports have raised the stakes involved in the measures being taken by President Obama to check further foreclosures and to address the recession. The severe warning for the future, points to the worsening of the housing crisis, the credit crunch and the financial slump – the most terrible since the 30’s. All this has plunged the nation into the second year of recession. Considering the weight of the negative forces pushing down the economy the Federal Reserve is apprehensive “ that the recovery would be unusually gradual and prolonged.”

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