Experts: Growth likely will be weak
trial average was down 94 points at 13,151 in midafternoon. The Standard & Poor’s 500 index was down 11 points at 1,417. The Nasdaq composite index was down 28 points at 2,985.
High unemployment and weak wage growth have kept consumers cautious about spending, which accounts for 70 percent of economic growth. Most economists expect just slim gains in consumer spending in the final three months of the year, which should keep growth weak.
“Despite the positive numbers today … we are not in a consumerled recovery,” said Chris Christopher, an economist at IHS Global Insight.
A Labor Department report suggested the job market is improving, which could set the stage for more spending next year.
Applications for unemployment benefits, which are a proxy for layoffs, fell by 29,000 last week to a seasonally adjusted 343,000. That’s the second-lowest total this year.
The drop indicates companies are cutting fewer jobs and not yet panicking about the “fiscal cliff.” That’s the combination of tax increases and spending cuts set to take effect next month if President Barack Obama and Republican lawmakers fail to reach a budget deal before then.
Consumers are also seeing relief at the gas pump, which leaves them more disposable income. Gas prices have fallen almost 50 cents over the