Upbeat Signs for U.S. Economy
The number of Americans filing for first-time unemployment benefits fell for the fourth straight week, and consumer sentiment brightened in November, according to two reports released Wednesday that suggested the U.S. economy may have weathered the worst of its downturn.
But California, which entered the downturn later than most of the country, showed signs of remaining stuck in the economic doldrums. The Labor Department reported that in California during the week ended Nov. 10, 67,357 initial claims for unemployment were filed, the highest figure in nearly three years.
Economists said the stabilization nationally in the jobs market and consumer confidence, which have suffered in the face of a severe economic downturn, boosted hopes that a widely expected recession will be shallow and short-lived.
Unemployment, currently at 5.4%, has been on the rise as the economy has slowed. Analysts have worried that continued layoffs could derail consumer confidence and curtail spending, which accounts for two-thirds of economic activity.
“Most forecasters, like us, were predicting a fairly mild recession, and now there’s talk that it’ll be even milder than that,” said Cary Leahey, senior economist at Deutsche Banc Alex. Brown. “One can’t quarrel with the fact that the numbers have turned from bad a month ago to mixed.”
Initial jobless benefit claims fell to 427,000 in the week ended Nov. 17, a period shortened by the Veterans Day holiday, the Labor Department said. The decline of 15,000 from a revised 442,000 the previous week brought initial claims to their lowest level since 393,000 the week of the Sept. 11 attacks.
Wall Street economists had forecast a rise in new claims to 461,000 for the latest week. The Labor Department originally had reported initial claims at 444,000 in the week of Nov. 10.
The latest figures for California, covering the week ended Nov. 10, reflected an increase of 634 claims from the week before. It was the highest total since Feb. 6, 1999, when claims totaled 70,896.
Separately, the University of Michigan’s closely watched consumer sentiment index rose for a second straight month, to 83.9 in November from 82.7 in October, beating forecasts and a preliminary reading of 83.5. The index read 107.6 a year ago.
“As far as consumers are concerned, they’re seeing the stock market go up. They’re seeing gasoline prices go down, and they’re seeing better news from Afghanistan,” said Mark Vitner, economist at Wachovia Securities in Charlotte, N.C. “That should put consumers in a little bit better spirit.”
The data reinforced burgeoning hopes that an economic recovery may not be far off and triggered a hefty sell-off on the bond market as investors saw less chance the Federal Reserve will cut interest rates for an 11th time this year in December.
Stocks, which have been on an upswing in recent weeks, fell as investors booked profits ahead of the Thanksgiving holiday. The dollar rose against other major currencies.
The federal government started its fiscal year in October in the red, posting a $9.39-billion deficit during the month, the Treasury Department said in a report issued Wednesday. The budget gap was smaller than the $11.32 billion seen in October 2000.
Snapping a trend that had endured for several weeks, the number of Americans continuing to draw jobless benefits fell to 3.73million in the week ended Nov. 10, the latest period for which data are available, from 3.80 million in the prior week.
This so-called continued claims figure began its upward march in the week ended Sept. 15, when claims measured 3.28 million, peaking at an 18-year high in the week ended Nov. 3.
The closely watched four-week moving average fell for the fourth consecutive week, to 454,250 in the week ended Nov. 17 from 474,250. The average, which irons out week-to-week volatility and is considered a more reliable barometer of job market trends, reached its lowest level since 423,750 in the week ended Sept. 22.
