Jobless Claims Fell To 40700 By 34000 In The Third Week Of November
Positive data on increase in consumer spending and a fall in jobless claims seem to be pointing towards some respite for the otherwise sluggish US economy and hopefully can be construed to be a message for a cheerful festive season ahead. US consumers increased spending for a fifth straight month in October and unemployment claims filed also fell in the last week, suggesting that consumers were coming out of their shells as employment was gaining some traction.
While, consumer spending grew by 0.4% in October, up from the growth of 0.3% in September, jobless claims fell to 40700 by 34000 in the third week of November. In line with the growth in the consumer spending, the Thomson Reuters-University of Michigan final index for consumer sentiment for November rose to 71.6, which was the highest since June. Some of the news that acted as a dampener included a fall in purchase of consumer durables and a decline in new and previously owned home sales in October. The unexpected increase in select economic data was also marked by a GDP growth rate higher than expected. The US economy grew 2.5% in the third quarter of 2010 and beat the expected growth of 2%.
However, a survey on employment prospects conducted by the University of Michigan does not suggest that Americans are very optimistic about the growth in the job market. The unemployment rate persists at a stubborn 9.6% at present and analysts are uncertain if the US economy can reduce this figure substantially in the near future.
Meanwhile, the US dollar has been gaining grounds more as a safe haven currency due to eventualities in Korea and Europe. The escalating tensions between the two Koreas suggestive of a possibility of a war has led to investors taking shelter in the safe haven of the US dollar, pushing the currency up slightly. The worsening financial condition of the Irish economy, which has forced it to ask the Euro zone for bailing it out, has also led investors to rush the safety of the US dollar. Ireland’s action follows Greece seeking a bailout package earlier this year and there was fear lurking that this could result in the crisis spreading to other parts of Euro zone.
The good news on some key economic parameters in the US should hopefully be sustainable and result in a positive growth cycle for the economy and lift it from the sluggishness that it has been experiencing for a while. Projections for the next year suggest that the US economy is likely to grow between 3% and 3.6% down from the earlier projection of 3.5% to 4.2%. Hopefully, better economic performance along the way could put the US economy on a higher growth trajectory and ease its economic woes.
In any case, retailers in the US are planning to push prices down for the festive season to attract consumers. Hopefully, this should provide a boost to consumer spending during the festive season and an additional push to the US economy as well.
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