Jobless claims and retail sales bring merry economic news just in time for the holidays. According to the Labor Department, jobless claims are at the lowest level they’ve been in two months. The agency reported a seasonally-adjusted number of claims of 343,000, which is the second lowest number so far this year. This is also the fourth week in a row that unemployment claims have dropped. Economists were not expecting such bright news on jobless claims. They expected unemployment to be flat.
Unemployment claims soared in the wake of Hurricane Sandy, although prior to the storm they were fluctuating between 360,000 and 390,000 claims per week. The slowing in jobless claims does indicate that employers are not cutting as many jobs as they were earlier this year, but if the economy is going to recover fully, hiring needs to increase so that the number of weekly claims will decline further.
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Meanwhile retail sales have rebounded from the loss experienced in October, which was also likely due to Hurricane Sandy. October’s retail sales slumped by .3 percent, but this latest report shows a .3 percent increase. Economists had expected a .5 percent increase in sales, but much of the difference between their expectations and the actual number is probably due to falling gas prices. The decrease in receipts from gas stations for the quarter was the biggest drop in four years.
Reuters reports that a separate retail sale measurement which removes the sales of gasoline, building materials and automobiles does show a 0.5 percent increase in sales, just as economists predicted. This measurement is close to the expected consumer spending gauge used by the government, which is an important factor used by economists to measure growth.
In spite of all this good news, economists are being cautious about the nation’s economic recovery. The fiscal cliff looms large overheard as consumers fear the tax hikes that are just around the bend. Also cuts in government spending aren’t helping much either. Economists believe that fourth quarter growth for this year will be at only a 1.2 percent annual rate rather than the 2.7 percent rate we saw in the last quarter.