The nation's financial picture grew darker yesterday, marked by breathtaking numbers: a quarter-trillion-dollar budget deficit for a single month, a half-million new applications for unemployment benefits and wild swings on Wall Street that briefly pushed the Dow Jones industrial average below 8,000.
Wall Street eventually rallied to post its third-best point gain ever, but the volatility of a weak economy remains a concern among investors.
Analysts predicted that a steady drumbeat of gloomy statistics would only get worse in coming months as the country endures what could be the worst downturn since the severe 1981-1982 recession.
The initial costs of the government's economic bailout efforts sent the U.S. budget deficit for October soaring to a record $237.2 billion, putting it on track to reach the once-unfathomable sum of $1 trillion for the year.
"And as bad as these numbers are, they may look good a year from now because things are going to get much worse," said Sung Won Sohn, an economist at the Smith School of Business at California State University.
Still, financial markets rose for the first time this week after three days of selling that wiped out about $1 trillion in shareholder value. Many investors, though nervous about a prolonged economic downturn, appeared convinced the market had priced in enough bad news. The Dow rose 552.59, or 6.67 percent, to 8,835.25.
It's "a herd mentality," said Ryan Larson, senior equity trader at Voyageur Asset Management. "We started going higher - and you don't want to be the last one on the boat."
But investors grappled with more grim economic news as the number of newly laid-off workers applying for jobless benefits last week hit the highest level since the period right after the Sept. 11, 2001, terrorist attacks. First-time claims increased by 32,000 to 516,000, the Labor Department said.
Payroll losses at companies from Citigroup Inc. and Goldman Sachs Group Inc. to Ford Motor Co. and Circuit City Stores Inc., the consumer electronics chain that filed for bankruptcy this week, mean unemployment claims will probably rise further.
As the economy weakens, the government's fiscal picture was projected to deteriorate, too, with layoffs cutting into tax revenues and forcing higher payouts for programs such as unemployment benefits and food stamps.
