Jobless claims hit six-year high

WASHINGTON - The number of newly laid off people unexpectedly hit the highest level in more than six years, the Labor Department reported Thursday.

The faltering economy and tight credit have forced companies to cut back, and as the job market shrinks, consumer spending may also dwindle.

"Consumers will be very tightfisted in the coming months," predicted Richard Yamarone, an economist at Argus Research.

"Nothing shuts down the consumer -- and the economy -- like the loss of a job."

As companies struggle with slowing customer demand, harder-to-get credit and higher costs for fuel and other raw materials, they are responding by laying off workers.

New applications filed for unemployment benefits rose last week by a seasonally adjusted 7,000, to 455,000, the government said in its weekly report. That was the most since late March 2002, when the job market was struggling mightily to get back on its feet after the 2001 recession.

A program to locate people eligible for jobless benefits played a role in last week's increase, a department analyst said. But the analyst couldn't say how much of a role.

The latest snapshot of layoff filings was worse than economists expected. They were forecasting new claims to drop to around 430,000.

The data disappointed Wall Street and the White House. The Dow Jones industrials tumbled 224.64 points to close at 11,431.43.

"The job market isn't strong right now as we work through the downturn in housing and high energy prices. We would like to see more job creation," White House spokesman Tony Fratto said. He credited the government's recent stimulus program as a helpful cushion.

ASSOCIATED PRESS