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Dipping into the 401(k)

Withdrawals from 401(k) retirement saving plans saw their biggest spike in at least five years, Fidelity Investments said on Friday, in the latest sign of hardship amid a dismal economy.

Fidelity reported that 62,000 people made hardship withdrawals from their 401(k) workplace plans during the second quarter. That’s up from 45,000 participants during the prior quarter, a 37% increase. That means that 2.2% of Fidelity participants took a hardship withdrawal in the second quarter, compared to 2% in the same period last year.

That means that 2.2% of Fidelity customers took a hardship withdrawal in the second quarter, compared to 2% in the same period last year.

Fidelity also said that 11% of participants took out loans from their 401(k) over the past 12 months, an increase of two percentage points from the prior year. The average loan amount was $8,650 at the end of the second quarter.

Fidelity said the top reasons people took loans and made withdrawals were to prevent foreclosure or eviction, pay for college, or purchase a home.

“The current economy has forced some workers to borrow from their 401(k) accounts in order to pay for critical living expenses, ultimately jeopardizing their future retirement,” said James MacDonald, president of workplace investing for Fidelity Investments.

Oil dips as jobless claims soar

Oil dipped toward $75 per barrel on Thursday, paring earlier gains, after a surprise rise in U.S. unemployment claims to a nine-month high was balanced by an upgrading of Germany’s growth forecast by its central bank.

The U.S. jobless figures heightened concerns about the pace of recovery in the U.S., the world’s largest economy. Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday’s report.

A Labor Department official said there was nothing unusual in the state level data. The data covered the survey week for the government’s closely watched employment report for August, scheduled for release early next month.

U.S. September crude was down 6 cents to $75.36 a barrel. ICE front-month Brent fell 23 cents to $76.24.

However, oil found some support from a rally in equity markets in Asia and Europe. European shares rose after Germany’s central bank upgraded its forecast for this year’s economic growth.

Analysts downplayed the effect on oil prices of deepening tensions between Iran and the United States. Ayatollah Ali Khamenei, the country’s supreme leader, said on Wednesday that Iran would not talk with the U.S. in the current climate.

Oil prices at $76

(Reuters) – Oil hovered near $76 a barrel on Thursday after a three-day price slide as robust euro zone growth data were largely eclipsed by lacklustre macroeconomic data that reinforced doubts on the global fuel demand outlook.

Early in the session, prices rallied after news that euro zone gross domestic product (GDP) grew at its fastest pace in more than three years in the second quarter, boosted by strong performances in Germany and France.

But mixed macroeconomic data out of top oil consumer the United States later doused positive sentiment.

By 10:52 a.m. EDT, U.S. crude prices for September were down 15 cents at $75.59 a barrel after rising more than $1.

ICE Brent crude was down 26 cents at $75.26.

“The whole week has been about poor economic data and today’s releases show that the U.S. consumer is still on the mend,” said Harry Tchilinguirian, commodity strategist at BNP Paribas.

“Retail sales disappointed and if consumer confidence in August managed to come in a notch above expectations…it still remains below the June reading.”

U.S. retail sales rebounded in July but showed hints of lingering economic softness while consumer sentiment appeared to have stabilized in August following a sharp drop the previous month.

But earlier strong European data on Friday has helped set a floor beneath prices at least temporarily, analysts said.

The Organization of the Petroleum Exporting Countries said demand for oil would continue to grow slowly in 2011, when world economic expansion is projected to be slightly lower than this year’s, leaving the current supply overhang intact.

STILL CAUTIOUS

Front-month crude was on course for a nearly 6 percent fall for the week, and analysts expected it to stay below the $80 a barrel benchmark.

Oil prices were in a $70-$80 a barrel range, where they have mostly traded since June, barring a brief foray above $80 in August.

“The market is very much in ’08 mode when it was doubting aspects of the recovery. There is an element of suspicion about whether it’s sustainable,” said Barclays Capital oil analyst Amrita Sen.

In the previous session, the number of people filing new jobless claims in the United States unexpectedly rose to its highest level in close to six months, a fresh signal of sluggish economic recovery.

Stocks of oil products in the U.S. including gasoline rose last week even at the height of the summer driving season, according to the U.S. Energy Information Administration.

Jobless claims reach new heights

The number of U.S. workers filing new claims for unemployment insurance unexpectedly rose to its highest level in close to six months, a fresh signal of a weak jobs market.

The number of U.S. workers filing new claims for unemployment insurance unexpectedly rose to its highest level in close to six months, a fresh signal of a weak jobs market.

The data comes two days after the Federal Reserve downgraded its assessment of the economy’s health and said it would take steps to ensure its support for the fragile economic recovery does not wane.

So, how should we fix this? Not with any stimulus. Here’s what one politician thought:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

No, not Ronald Reagan. This quote is from John F. Kennedy. You may remember him as a Democratic president from the 60’s. Here’s another gem of his:

“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

The stock market has responded to the jobless data, and not in a good way. Stocks have fallen, as the data indicates a weak labor market.

Unemployment benefits gone for near 1 million

On Thursday, the Senate failed for the third time to extend the deadline to file for a safety net that would ensure continued unemployment benefits for almost 1 million people.

The Senate trimmed the bill to add $33.3 billion to the deficit rather than $55.1 billion. The changes scaled back Medicaid funding for the states and reallocated stimulus and Defense Department spending. The bill pushed back the deadline for federal unemployment benefits until the end of November, renewed expired tax provisions, lengthened a small business lending program, and added to infrastructure developments.

The vote was 57-41. Democrats needed 60 votes to overcome Republican filibuster. The bill will be pulled.

Nevada takes jobless title

For those of you who thought Michigan would forever be the top of the bottom, disappointment in the month of May.

Nevada’s jobless rate has hit a record high. It is now the state with the highest jobless rate. Michigan has held that *cough* distinction for the past four years.

Nevada’s rate climbed to 14%, up from 13.7% in April. Michigan went from 14% in April down to 13.6% in May. Michigan’s rate peaked in December at 14.5%.

During the last year, Nevada has lost a net total of more than 29,000 jobs, and posts the highest percentage increase in unemployment at 2.5%.

Hewlett-Packard job cuts

Hewlett-Packard intends to cut 3,000 jobs over the next few years as it increases its reliance on automated data centers for business customers.

HP plans on investing $1 billion in ramping up the automated centers. The change will cut about 9,000 jobs, but HP plans on adding 6,000 jobs in other departments over the same time period. A boost between $500 million and $700 million is expected for the fiscal year of 2013 due to these changes.

In August of 2008, HP purchased Electronic Data Systems and is cutting 25,000 jobs as a result of that integration.

The company has about 300,000 employees and reported a 28% profit last quarter of $2.2 billion as demand for personal computers continues to hold strong.

Unemployment shrinks

Last week, Americans filed for unemployment benefits, and it was less than it has been in awhile.

Jobless claims fell by 11,000 to 448,000. Companies are adding staff as sales improve. The economic expansion that began last year may be sustainable. Stocks climbed better than estimated, another sign of economic recovery.

Now, here’s the bad news. These numbers only track the individuals who are still eligible for unemployment benefits. The week ending April 10th saw an increase in people collecting emergency and extended payments, from 91,000 to 5.4 million. Many people still seek federal aid for unemployment that is not necessarily counted the same in the unemployment rate.

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