ECONOMIC STUNNER – AT 9:36 A.M. ET:  If this election campaign is fought over the economy, the Dems may be in even worse trouble than current polls show.  Get this:

New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

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.

"There are some technical factors out there and the seasonal factors seem to be pushing it up a little bit. But given the trend of claims it looks like the economy ran into a wall in August," said Chris Rupkey, chief financial economist at Bank of Tokyo-MitsubishI UFJ in New York.

COMMENT:  Compare please with our first post this morning, announcing that President Obama starts a ten-day vacation after lunch today.  How do you think that will go down when juxtaposed with these employment figures?  Think mosque at Ground Zero. 

Are we slipping into a double-dip recession?  I am not an economist and don't know.  But if we are, the implications can be catastrophic.  When the current crisis hit in 2008, conveniently for Obama right before the election, the country had some money to fight it.  We don't have much in the bank right now.  And the public is clearly losing confidence in this administration. 

Obama should cancel his vacation, send his family away and stay in the White House, working on the economy.  Appearances count.  But he won't.  And Americans will notice.

August 19, 2010