Jobless Claims Up, Durable Goods Orders Bleak

First-time claims for unemployment benefits rose for the latest reporting week, the Commerce Department said on Thursday. Analysts had expected a drop in the jobless claims, so the rise caught economists off guard and suggested further weakening of the American economy heading into the second quarter. Mainstream media outlets, parroting the Bush Administration's spin, blared that the total number of claims was substantially less than it had been last year at this same time, but few reports suggested that the reason for this could be that large-scale job losses over the past four years might mean that fewer people in the workforce now qualify to claim first-time unemployment benefits.

In other bad news, excluding orders for civilian and defense aircraft, durable goods orders slid a fifth of a percent last month, again surprising analysts, who had predicted a healthy rise of half-a-percent in non-transportation orders. Business spending on durable goods slid more than two percent, continuing corporate America's reigning in of plans for expansion over the coming year.

Dark Wraith CyberGloss

Durable goods orders for aircraft in the defense sector to some extent provide a floor on overall aircraft spending since the Pentagon is almost always putting in orders both to replace older and disabled planes and to upgrade and modernize the fleet.

  Including the transportation sector, durable goods orders were up modestly, but less than analysts had expected, and the overall rise was due almost entirely on the civilian side to a massive, one-time order for planes by one airline, and on the defense side by the continued spending binge by the Pentagon on its wish-list of high-priced weapons systems. With respect to the large rise in orders for passenger planes, some observers wonder how any airline, facing the skyrocketing cost of jet fuel, could plan for massive expansion in a brutally competitive industry where other airlines teeter on the brink of insolvency. The scenario is reminiscent of the mid-1990s, when start-up airlines like Value Jet and Air South were the darlings of investors and the media as they postured about their "competitive edge" and put in big aircraft orders, only to vanish from the industry within a few short years.

In market news from Thursday, stocks finished flat to down, with broad indices moving very little and the blue-chip index of 30 industrial companies' stocks dropping a little more than a tenth of a percent in value.

Dark Wraith CyberGloss

An investor forms a "short position" by borrowing stock and selling it; the position is then closed by repurchasing the stock and returning it to its owner. A gain is made if the stock is repurchased at a lower price than that at which it was sold.

  Bond prices continued to slip, too, with the resulting yield on the benchmark 10-year Treasury reaching 4.60%. Far more worrisome than the stock numbers for Thursday was the news that short interest on both the huge, smaller-cap NASDAQ and the enormous, large-cap New York Stock Exchange has risen to record levels, pointing to deep and wide-spread preparations among investors for a continuing and broad-based drop in the stock markets,

Dark Wraith CyberGloss

"Short interest outstanding" is a count of how many short positions are open at a given time.

  which now appear to some Street observers to be bracing for a hard ride down as the economy finally reaps the fruits of more than four years of fiscal irresponsibility by the ruling party that had posed for years as the bulwark of reliability opposed to others who were cast as untrustworthy to manage the nation's finances and economy. Now, it would appear that the stock and bond markets have made their assessment of those claims, and the verdict is not favorable to the Republicans; but neither is it good news for the country, its workers, or its investors, who will ultimately suffer the consequences of the inadequacies of the current regime in Washington.