Unemployment Rate Persists
First-time claims for state unemployment benefits rose unexpectedly in the latest week, the U.S. Department of Labor reported Thursday. The number of initial claims in the week ending June 20 rose 15,000 to 627,000. Claims in the previous week were revised to an increase of 7,000 to 612,000 compared with the initial estimate of a 3,000 increase to 608,000.

The number of people continuing to receive unemployment aid "rose more than expected," the Associated Press reports. The advance number for seasonally adjusted insured unemployment during the week ending June 13 was 6,738,000, an increase of 29,000 from the preceding week's revised level of 6,709,000, according to the Labor Department.

Unemployment, which has already reached the highest level in a quarter-century — 9.4 percent — "won't peak until this time next year, and then it will remain very high through next year," Mark Zandi, chief economist for Moody's Economy.com tells the Washington Post. "It won't get back to full employment until 2013 or 2014. This really speaks to the severity of the job losses that have been absorbed by the economy. They were massive."

According to new findings from consulting firm Watson Wyatt Worldwide Inc., 52 percent of 179 companies surveyed expect to employ fewer people in three to five years than they did before the recession began. Among employers that have cut salaries, 55 percent expect to restore the cuts in the next year while 20 percent expect the cuts to be permanent and 73 percent expect employees to shoulder more of the cost of health care than before the recession began.

The Watson Wyatt survey "offered a few hints of good news," the Wall Street Journal noted (subscription required). "About a quarter of respondents said they believe their companies' results had already 'bottomed out,' compared with 13 percent in a similar survey in April."

Last week, a report from the U.S. Department of Commerce showed gross domestic product shrank at a 5.5 percent annual pace in the first three months of the year.

"Recent data show some areas of the economy, such as housing and manufacturing, are seeing a smaller pace of decline, consistent with the Federal Reserve's projection that the slump is 'slowing,'" Bloomberg News says. "Even so, companies are unlikely to hire until there are sustained gains in demand, meaning a recovery remains dependent on the effectiveness of government stimulus efforts."

Durable Goods Orders Rise
New orders for manufactured durable goods increased 1.8 percent in May, the U.S. Census Bureau reported last week. This was the third increase in the last four months and followed a 1.8 percent April increase.

Excluding transportation, new orders increased 1.1 percent. Excluding defense, new orders also increased 1.4 percent. Machinery, up three of the last four months, had the largest increase, 7.7 percent to $22.5 billion.

"The May durable goods report adds a persuasive component to a growing body of evidence that U.S. economic activity is beginning to stabilize after a deep contraction," Cliff Waldman, Economist for the Manufacturers Alliance/MAPI, said in analysis of the Census Bureau report. "Stripping out either transportation or defense, two volatile categories of demand, new orders were up over 1 percent. And 'manufacturing with unfilled orders' had a sharp increase for the second consecutive month, indicating that demand is beginning to make a positive contribution to future production. The industrial composition of orders was mixed in May, although soaring demand for machinery is a positive sign for a broad U.S. economic recovery.

"Nonetheless, the still sharp declines in year-over-year activity across all categories of demand is a reminder that the U.S. factory sector still has a long way to go and is facing the headwind of one of the deepest global contractions in a generation," Waldman added.

Dreamliner Delayed. Again
After years of delays, The Boeing Co. on Monday was readying its 787 Dreamliner for its first test flight. Then it wasn't.

On Tuesday, Boeing said it would have to delay the first flight of its 787 Dreamliner. Again.

A structural flaw detected during ground tests requires additional reinforcement on the aircraft, a problem that will delay the plane's first test flight, possibly for months. Boeing executives said they had found additional stress where the wings attach to the sides of the plane. Modifications to reinforce the structure should fix the problem, Boeing said in a statement.

The Dreamliner was the fastest-selling commercial airplane in Boeing history. The Dreamliner program is now two years behind schedule, the latest setback in a program considered crucial to the planemaker's future. "Already, the delays have cost Boeing millions of dollars in penalties and concessions to customers," the Wall Street Journal reports.

Additional delays could provide "more breathing room for rival Airbus, whose ultramodern A350 is years behind the 787 in development," the New York Times says. Although Airbus has some 500 orders, the first delivery is not expected until mid-2013.

Energy Dept. Announces Fuel-Efficiency Loans to Automakers
"Obama administration officials fanned out across Metro Detroit on Tuesday, offering $59 million in federal money, advice about jobs and a vision for the future in the wake of General Motors Corp.'s bankruptcy filing," the Detroit News reported last week.

The U.S. Department of Energy on Tuesday said it will loan $5.9 billion to Ford Motor Co. and $1.6 billion to Japanese automaker Nissan to invest in improving the fuel economy of their U.S.-built vehicles, officials said last week. Another $465 million will be loaned to electric sports-car maker Tesla Motors. The loans are the first awarded out of a $25 billion program to help the automakers meet new fuel-efficiency standards of at least 35 mpg by 2020, a 40 percent increase over current standards.

The loans to Ford will help the company upgrade factories in Illinois, Kentucky, Michigan, Missouri and Ohio to produce 13 fuel-efficient vehicles. Ford had been seeking about $5 billion in loans by 2011 and a total of $11 billion from the program to invest $14 billion in advanced technologies over seven years.

Nissan will receive $1.6 billion to retool its plant in Smyrna, Tenn., to build advanced vehicles and build a battery manufacturing facility.

Tesla will use $365 million for production engineering and the assembly of an all-electric vehicle that is expected to travel up to 300 miles per charge and begin selling in 2011. It will use $100 million for a powertrain manufacturing plant expected to employ 650 workers.

A significant portion of the program will also help suppliers. "Dozens of auto companies, suppliers and battery makers have sought a total of $38 billion from the loan program, which was created last year to provide low-interest loans to car companies and suppliers to retool their facilities to develop green vehicles and components such as advanced batteries," according to the Associated Press.

Agence France-Presse reports: "Additional loans will be awarded to 'large and small automobile manufacturers and parts suppliers up and down the production chain' over the coming months, said [Energy Secretary Steven Chu], who vowed to release the funds as quickly as possible."

Meanwhile, the White House is creating a Council on Automotive Communities and Workers, an inter-agency council charged with working "to address the issues facing the automotive industry and protect the hardest-hit communities and workers." The panel will be headed by so-called "car czar" Ed Montgomery.

House Passes 'Historic' Cap-and-Trade Bill
In what is being called an historic vote, the U.S. House of Representatives on Friday approved a sweeping energy bill that would set tough new greenhouse-gas emissions standards for U.S. companies and mandate more use of renewable energy sources.

At the heart of the American Clean Energy and Security Act is a "cap-and-trade" system for limiting emissions in which companies would buy and sell permits to meet emissions limits.

The 219-212 vote marked "the first time that either house of Congress has approved a bill aimed at curbing the heat-trapping gases scientists have linked to climate change," the New York Times said. For better or worse, it "could lead to sweeping changes in many sectors of the American economy, including electric power generation, agriculture, manufacturing and construction."

"The Senate is expected to write its own version of the legislation before it can be passed to President Obama, who is actively promoting the policies to put the U.S. into a clean energy economy path," the International Business Times reports.