Data show rise in consumer spending, drop in jobless claims

Data show rise in consumer spending, drop in jobless claims
By Neil Irwin
Copyright by The Washington Post
Wednesday, November 25, 2009; 10:09 AM
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/25/AR2009112500273.html?hpid=topnews


Consumer spending rose in October and fewer people filed for jobless benefits last week than in over a year, according to a new round of economic data that provides a bit of hope for the economy heading into the holiday season.

Personal consumption expenditures rose 0.7 percent in October, the Commerce Department said Wednesday, more than expected and following a 0.6 percent drop in September. Personal income also rose more than expected, with a 0.2 percent climb.

And 466,000 people filed first-time claims for unemployment insurance benefits last week, the Labor Department said, the lowest level since the recession deepened in September 2008. Although still high by most standards, there has been a steady downward slope to that weekly jobless claims number that offers hope that total job growth could return in the first part of next year.

There was a negative surprise in Wednesday's economic data as well, however. Orders for durable goods -- those expected to last for years -- fell 0.6 percent in October, the Commerce Department said. The number was expected to rise, and it tends to presage economic activity overall. That's because when orders are placed for such big-ticket items as automobiles, airplanes, computers and industrial machinery, it takes time for their production to occur, keeping workers busy sometimes for months.

The steepest decline was in orders for defense-related goods. Excluding defense, new orders actually rose 0.4 percent.

The stock market was little changed in early trading Wednesday morning, as the good news on jobs and consumer spending was weighed down by the durable goods orders. At 9:40 a.m., the Dow Jones industrial average was up 3 points, or 0.03 percent.

The rise in personal consumption expenditures offers some hope for holiday sales at retailers. The 0.6 percent rise followed an 0.7 percent drop in September, but that drop was distorted by the end of the Cash for Clunkers auto purchase program, which had artificially inflated August consumption data.