New data point to chronic economic problems

Associated Press

WASHINGTON

Sour reports Thursday on the number of people who sought unemployment benefits and buyers of new homes illustrate what Federal Reserve Chairman Ben Bernanke acknowledged Wednesday: Many factors weighing on the economy are proving to be more chronic than first imagined.

Applications for unemployment benefits rose to a seasonally adjusted 429,000 last week, the Labor Department said Thursday. It was the biggest jump in a month and marked the 11th-straight week that applications have been above 400,000. Elevated unemployment-benefit claims signal a worsening job market.

New-home sales fell in May to a seasonally adjusted annual rate of 319,000, the Commerce Department said. That’s fewer than half the 700,000 that economists say must be sold to sustain a healthy housing market. Sales of new homes have fallen 18 percent in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century.

Stocks tumbled more than 200 points after the weaker data on housing and layoffs were released. It came one day after the Fed lowered its outlook for growth and unemployment for the rest of the year.