Underscoring the dour state of the U.S. economy, weekly jobless claims reached their highest level in seven years, while durable-goods orders fell the most in 18 months.

The results, released before the opening of the stock markets Thursday, provide further evidence of deterioration in the economy, which some economists think could hasten a move by Congress to approve a $700 billion rescue of financial companies.

The Labor Department said U.S. weekly jobless claims reached their highest level in seven years with people from Louisiana and Texas, states hit by the hurricane, filing claims. First-time claims increased 32,000 to 493,000 for the week ending Sept. 20. The four-week average of claims also jumped, by 16,000, to 462,500 -- the highest since November 2001.

According to the Commerce Department, orders for U.S.-made durable goods fell 4.5% in August amid weaker demand for a broad range of goods. Excluding the 8.9% decrease in transportation goods, orders fell 3%, the sharpest decline in 19 months. Economists, according to MarketWatch, had expected the decrease to be 2%.  

Douglas Smith, chief economist of the Americas for Standard Chartered Bank, said the durable-goods results were worrisome given that up until this point business spending had held up “pretty well.” He said the jobless-claims number was likely influenced by the hurricane, and at this time of year, numbers are often skewed because of inclement weather. 

Nevertheless, Smith noted that even last week’s jobless claims of around 460,000 doesn’t paint a positive picture of the U.S. economy.

“It’s really bad,” agreed John Lonski, Chief U.S. economist at Moody’s Investor Services. “It proves a recession is here and more needs to be done to stabilize the economy.”

Lonski said the data out Thursday should serve as an impetus for Congress to approve a bailout and should prompt a coordinated move by the Federal Reserve and the European Central Bank to implement an interest-rate cut.

Still, Smith isn’t convinced the reports out Thursday will prompt Congress to move any more quickly on a bailout. Congress is expected to make a decision by the end of the week.  He did say that while an interest rate cut isn’t likely, the reports will increase market expectation of a move by the Fed.

As for what the stock markets are focused on, economists agree the bailout is much more in the forefront then durable goods and jobless claim numbers.

“The market is focused on the bailout plan,” said Scott Brown, chief economist at Raymond James. The data are consistent with the deterioration in growth over the past few months, he noted.