New jobless claims jump, consumer spending down

That8217;s also the highest level of claims since November 1982, though the work force has grown by about half since then. Separately, consumers cut spending for the fifth straight month in November, a report by the Commerce Department showed. The 0.6 per cent drop in consumer spending last month followed an even larger 1 per cent fall in October. The steep plunge in gasoline prices, which is good news for consumers, made the declines look worse.

Excluding price changes, consumer spending would have dropped by 0.5 per cent in October and actually risen by 0.6 per cent in November. The November increase excluding inflation was the best showing in more than three years. Still, economists think the overall trend for consumer spending is down, given the problems facing the economy. They include a severe recession, a financial crisis that has cut off access to credit for millions of borrowers and a massive wave of job layoffs.

There was some improvement in the number of Americans continuing to seek unemployment benefits, which dropped slightly to 4.37 million from 4.39 million the previous week. Wall Street economists had expected the number to increase to 4.4 million. Economists consider jobless claims a timely, if volatile, indicator of the health of the labor markets and broader economy.

The elevated level of new jobless applications is just one of several signs that the labor market has deteriorated.