The number of Americans lining up for first-time jobless benefits reached its highest level in more than nine years last week as U.S. labor markets, already hurt by a sinking economy, suffered a fresh blow from the Sept. 11 attacks on the United States. 
The Labor Department said on Thursday early data showed an 11,000 rise in claims just in New York, the state hit hardest after hijacked planes slammed into the World Trade Center, collapsing buildings and shutting down stock markets for days. 
Several days of grounded airline flights followed by substantial cutbacks in flights also contributed to increased jobless claims among auto workers in Michigan, where companies were unable to have needed parts delivered from Canada. 
The dismal job market news further darkens the picture for the world's richest economy, which may already have been heading toward recession before the attacks. A separate report released on Thursday showed a third monthly decline in orders for long-lasting manufactured goods in August. 
"It's going to be a very difficult period and it's going to be hardest on workers. Jobs are already being cut and the disruption of the economy is very significant," said Mark Zandi, economist at Economy.Com in West Chester, Pa. 
The soft economy is going to eat into government surpluses as well, the Congressional Budget Office said on Thursday as it cut its fiscal 2001 estimate of the government surfeit by $32 billion to $121 billion. 
In its latest report, the Labor Department said the number of initial jobless claims rose by 58,000 to 450,000 for the week ended Sept. 22, the highest level since July 1992 when the United States was emerging from its last recession. 
U.S. Treasury bonds rose for a third straight session as the weak jobless data cemented expectations for another Federal Reserve interest rate cut next week. 
So far this year, the Fed has cut interest rates eight times to help prop up the economy and many economists expect them to lower borrowing costs again by at least 25 basis points when policymakers meet next week. 
Stocks slipped at midday, with the blue chip Dow Jones industrial average shedding 78 points, or 0.92 percent, and the high-tech Nasdaq composite off 44 points or nearly 3 percent. 
Last week's rise in claims was well above Wall Street expectations and added to the economic uncertainty expected over the next several weeks as more workers nationwide lose their jobs because of the attacks. 
"One of the biggest economic uncertainties is whether the ongoing layoffs will mushroom and spread," said Sung Won Sohn, chief economist at Wells Fargo. 
"Clearly the Sept. 11 attack is having a pronounced effect on employment. Airlines alone have laid off tens of thousands of people and there is probably more to come." 
The department said that increased joblessness in the latest data was reported in other states around the country and would likely continue for several weeks. Since the attacks, the aviation industry alone has laid off roughly 100,000 workers. 
The U.S. government has pledged $5 billion in direct aid and $10 billion in loan guarantees to keep airlines flying. 
But Zandi and others agree that tax cuts and other policy moves, including higher government spending and more interest rate cuts, could help the country rebound from a recession, commonly defined as six months of economic contraction. 
Within a few days of the hijack attacks, Congress approved a $40 billion emergency package to fund counter-terrorism and recovery efforts and lawmakers from both political parties have indicated they expect even more government stimulus. 
"The economy is in recession. It was slammed by the terrorist attack two weeks ago but I think with a bit of luck and some deft policymaking the economy could be firming up by early next year," Zandi said. 
U.S. military action could also help boost consumer confidence and spending, a key underpinning for the economy. "It's very much a function of what happens militarily and in the global political arena," he said, warning that another terrorist attack would be "debilitating" for the economy. 
Analysts in a Reuters poll forecast, on average, that initial claims would rise to 429,000. The four-week moving average, considered a more reliable gauge of employment condition because it irons out weekly fluctuations, rose to 422,000 from 410,250, remaining well above the key 400,000 level analysts closely watch. 
New orders for costly manufactured goods declined for a third straight month in August, the Commerce Department reported in a report that underlined how weak the economy was even before the devastating attacks on Sept. 11. 
The value of new durable goods orders fell 0.3 percent to $180.83 billion after larger drops of 1.1 percent in July and 2.5 percent in June. Durables are items like new cars, computers and appliances designed to last three years or more. 
Commerce officials said it was the first time in more than two years -- since the period from April-June 1999 -- that orders had fallen for three months in a row. Shipments, a gauge of current activity on the factory floor, also softened for a third consecutive month, down 1.2 percent in August following declines of 0.2 percent in July and 2.4 percent in June. 
"The world had changed over the past two weeks and I think businesses are retrenching along with consumers," Economy.Com's Zandi said. 
