Jobless claims spike to 26-year high

Number of Americans applying for first-time unemployment benefits rises to 667,000. Continuing claims top 5 million for the first time.

By Lara Moscrip, CNNMoney.com contributing writer

Last Updated: February 26, 2009: 9:12 AM ET

NEW YORK (CNNMoney.com) -- The number of Americans filing initial claims for unemployment insurance spiked, and those living on unemployment benefits hit a record high, according to a government report released Thursday.

For the week ended Feb. 21, 667,000 Americans filed initial jobless claims, up 36,000 from a revised 631,000 the previous week. That's the highest figure since October 1982.

Economists polled by Briefing.com were expecting claims to drop to 625,000.

In a sign that more jobless Americans are having trouble finding work, 5,112,000 continued on unemployment for the week ended Feb. 14, the most recent data available. That's the highest number since the Labor Department began keeping records since 1967.

Initial claims are expected to sharply increase, and it's likely they will reach 750,000 per week in the upcoming months, according to Ian Shepherdson, economist at High Frequency Economics in New York.

He noted that weekly filings, adjusted for population growth, would have to exceed the 1 million mark in order to break the jobless claims reported from the mid-1970s and early 1980s.

"We fervently hope that does not happen but we are not confident. Companies are throwing in the towel as they recognize that no sector is safe," Shepherdson wrote in a note.

The 4-week moving average of initial claims was 639,000, an increase of 19,000 from the preceding week. The average is used to smooth fluctuations in data.

The 4-week moving average for people continuing on unemployment was 4,932,250, an increase of 89,250 from 4,843,000 in the previous week.

The insured unemployment rate is 3.8%, nearly double the 2.1% rate from a year ago.

Stimulus: The stimulus bill that President Obama signed into law has several provisions that help those living on unemployment benefits.

The weekly unemployment benefit will temporarily increase by $25 on top of the roughly $300 jobless workers currently receive.

In addition, the first $2,400 of benefits in 2009 would be exempt from federal income taxes.

The stimulus also provides jobless workers with an additional 20 weeks in unemployment benefits, and 13 weeks on top of that if they live in what's deemed a high unemployment state.