Fingers crossed, the jobs are back
Economic indicators have given mixed signals about the US economy. The real estate market is grim but the stock market is shining bright,business Updated: Nov 27, 2010 21:33 IST
A hint of improvement in the unemployment picture helped lift U.S. stocks Wednesday as the nation headed into the economically important holiday shopping season.
The number of people seeking jobless benefits fell to its lowest level since July 2008, the Labour Department reported. On a seasonally adjusted basis, initial claims for unemployment insurance totalled 4,07,000 in the week that ended Nov. 20, down from 4,41,000 the week before. In March 2009, the weekly figure was as high as 6,51,000.
Other economic indicators released Wednesday gave mixed signals about the economy, including grim news about the real estate market, but the stock market tracked the bright side.
Despite renewed tensions on the Korean Peninsula, the Dow Jones industrial average rose 1.4% to 11,187.28, the Standard; Poor's 500-stock index gained 1.5 per cent to 1,198.35, and the Nasdaq climbed 1.9% to 2543.12.
"The momentum is upward; the recovery seems firmly intact,” said Paul Edelstein, senior economist at the consulting firm Decision Economics. But the recovery is weak, "and the amount of growth that were seeing just isn't enough . . . to support sustainable jobs growth,” Edelstein said.
Personal income, outlays and saving all increased in October, the Commerce Department reported Wednesday. Personal income ticked up 0.5% from September. Personal consumption expenditures increased by $44 billion, compared with an increase of $26.9 billion in September. As a percentage of disposable personal income, the savings rate was 5.7% in October, up from 5.6% a month earlier.
A survey of consumer sentiment showed improvement. The index compiled by Thomson Reuters and the University of Michigan hit 71.6% in November, up from 67.7 in October and 67.4 in November 2009. That was its best showing since June, but it was still lower than at any point in the first half of 2010.
The director of the survey wrapped up the results in a less-than-cheerful assessment.
"Unfortunately, there has been no improvement in consumers' financial prospect in the past two years," wrote Richard Curtin, the survey's chief economist. "While consumers clearly believe that the recovery has gained some traction, most still think that the economic gains will be too small to improve their own job and income position anytime soon."
New orders for manufactured durable goods fell 3.3% in October, the Census Bureau reported Wednesday. That followed a 5% increase in September. The decline included drops in orders for defence-related items that are not on the typical family's shopping list. But even excluding warplanes, guided missiles and the like, orders were down 2.1% in October.
Meanwhile, new data on home sales released Wednesday showed continued weakness in the housing sector.
Home prices fell 1.6% from the second quarter of this year to the third quarter, according to an index compiled by the Federal Housing Finance Agency.
From the third quarter of last year, the decline was 3.2%. Because prices of other goods and services rose 2% over that period, the inflation-adjusted price of homes fell 5.1%, the agency reported.
The index is based on data from mortgage giants Fannie Mae and Freddie Mac, which are regulated by the agency.
Sales of new homes fell at a seasonally adjusted annual rate of 8.1% from September to October, the government reported, but it added that the measure was plus or minus 16.1%. That meant the rate could have been negative 24.2% or positive 8%.
Figures do the talking
Personal income, outlays and saving all increased in October
Personal income ticked up 0.5% from September
As a percentage of disposable personal income, the savings rate was 5.7% in October, up from 5.6% a month earlier
The decline included drops in orders for defence-related items that are not on the typical family’s shopping list
The housing market "is still in deep trouble. There really isn't any revival there yet," said Nigel Gault, chief U.S. economist at IHS Global Insight.
In an exclusive partnership with The Washington Post.
First Published: Nov 27, 2010 21:29 IST