News from EPI EPI Press

Thursday, October 4, 2001

Nancy Coleman or Tom Kiley, (202) 775-8810



New unemployment claims up sharply; Friday’s full unemployment data will not yet show impact of attacks

Washington D.C. – Weekly government data released today shows a steep rise in the number of new claims for unemployment insurance benefits, a clear signal that the recession is hitting home for more American workers and their families.

Today’s figure of 528,000 is 71,000 – or 15.5% – higher than just a month ago and 226,000 – or 74.8% – more than a year ago. This trend points up the urgency for government action to strengthen the economy and repair the nation’s flawed unemployment insurance system, economists from the Economic Policy Institute told a Washington, D.C. policy briefing this morning.

“The fact that well over 400,000 workers applied for benefits shows that we are in serious trouble,” says Jeffrey Wenger, an EPI economist. “We are now in serious need of an economic stimulus, and the centerpiece of any stimulus plan should be a more generous unemployment insurance system.”

To help Americans understand how they would fare under the current unemployment benefits, EPI introduced a new UI Calculator on its website this week. Visitors to the site can type in their state and their current pay level to find out what their weekly unemployment insurance payment would be and where their state ranks out of all 50 and the District of Columbia.

The bad news about rising unemployment claims arrives one day before this month’s release of national unemployment figures, which will be based on data collected during the week of September 10 – too early to reflect the impact of September 11 events.

“After last month’s sharp rise, we would expect to see unemployment level off temporarily,” said EPI Vice President Larry Mishel. “We don’t know what Friday’s figure will be, but we can expect bad news on the unemployment front in the months to come as the economy slides deeper into this downturn.”

“Right now, we have an economy sputtering in neutral with consumers who aren’t buying and businesses that won’t invest because there’s no consumer demand,” Mishel explained. “That means it’s up to the government to get things moving again by investing in people and projects that will put money into motion again.”

An EPI report released at today’s briefing, Prosperity Wasn’t Just Around the Corner, by EPI economist Christian Weller, shows our economy was already nearing recession in July and August of this year.

According to the report, capacity utilization – which measures how hard manufacturers have to work to keep up with consumer demand – fell to its lowest level since 1982. Manufacturing output in August was down 5.5 percent compared with August 2000, as exports declined by 2.6 percent to their lowest level since 1999. Although the housing market had remained resilient during the beginning of the downturn, housing starts tumbled by 6.9 percent in August.

Taken together, these data suggest that the recent economic weakening is not simply a reaction to the events of September 11, but reflects more far-reaching problems in the American economy, which should be addressed with a comprehensive stimulus package. EPI’s recommendations for such a package are contained in another new report, Addressing The Nation’s Needs. Those recommendations include:

  • making more out-of-work Americans – including workers displaced directly or indirectly by the terrorist attacks – eligible for increased unemployment benefits;
  • sending temporary tax rebates to those Americans who did not earn enough money to benefit from the Bush tax refund;
  • sending all Americans a January 2002 tax rebate, to be announced immediately in order to spur holiday spending; and
  • increasing investment to speed up needed infrastructure improvements such as schools and railroads, both through direct funding and revenue sharing.


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The Economic Policy Institute is a non-partisan, non-profit economic think tank founded in 1986. The Institute is located on the web at