An economic stimulus package that passed the House Thursday morning hit a wall in the Senate.
Senate Majority Leader Tom Daschle, a Democrat, effectively killed the $90 billion measure by refusing to schedule a vote on it. "It probably comes as no surprise to you that we've looked at the compromise one last time and have concluded that it's wrong on all counts," Daschle said in a news conference.
The stonewall made hollow the President's claims of Wednesday afternoon, and stocks -- which rose when Bush said a compromise was near -- fell sharply Thursday when word of the impasse emerged. The
Dow Jones Industrial Average
fell 85 points Thursday and the Nasdaq lost 64.
The Senate announcement was accompanied by jobless data that depicted an improving economy. Among the economic stimulus package's provisions is a 13-week extension of unemployment benefits.
Initial jobless claims for the week ended Dec. 15 fell to their lowest level in five months, the Labor Department said, with the number of workers filing for first-time unemployment benefits dropping to 384,000 from 395,000 in the previous week. Thursday's data beat economists' forecasts for jobless claims to rise to 430,000.
"The last few weeks of claims data have been encouraging," said Josh Feinman, chief economist at Deutsche Asset Management. "They suggest the rate of deterioration in the economy may be slowing." Other economists agree: "The decline in job losses is most intriguing," said John Lonski, senior economist at Moody's.
The four-week average of jobless claims, considered a more reliable labor market barometer, fell to 438,000 from 450,250. Still, the number of workers continuing to receive unemployment benefits rose to 3.7 million from 3.6 million.
"The fact that claims have been below 400,000 for the past two weeks is significant," said Ethan Harris, senior economist at Lehman Brothers, who's forecasting payroll growth of 25,000 in December.
After the warmest November on record, some of the data's strength is thought to be weather-related. "Roughly speaking, there were probably 40,000 to 50,000 construction workers whose jobs were spared," said Harris.
Brother, Can You Spare Some Data?
Despite the improvement, Congress is still determined to give the large number of laid-off workers some extra help. "In the past, we haven't held unemployment hostage to other legislation," Daschle said in a news conference. "I would hope that, if nothing else, we could at least extend unemployment benefits."
Unemployment benefits are often extended in recessions, and lawmakers appear unwilling to make this one an exception. "It would be nice to wrap this around a larger package, but if we can't do it, at the very least let's pass what has to be passed, and I would think unemployment benefits would be high on that list," Daschle said.
It's hard to tell how many people will lose benefits if they're not extended. "If you assume 5% to 10% of new claimants are not finding jobs," said Tony Crescenzi, bond market strategist at Miller Tabak, "there could be 200,000 to 300,000 people affected, based on a monthly average of 1.7 million claims."
With a surge of claims set to expire in January, Crescenzi said he's fairly certain workers will get some form of relief.