Un­em­ploy­ment ap­pli­ca­tions down to pre­re­ces­sion level

The Washington Times Daily - - Business - THE ECON­OMY

The num­ber of peo­ple seek­ing U.S. un­em­ploy­ment ben­e­fits fell 9,000 to a sea­son­ally ad­justed 336,000 last week, bring­ing ap­pli­ca­tions to pre­re­ces­sion lev­els.

The La­bor Depart­ment said Thurs­day that the less volatile four-week av­er­age dropped 9,250 to 348,250.

The de­cline in ap­pli­ca­tions sug­gests com­pa­nies are cut­ting few work­ers. Still, they are not hir­ing many new ones.

The econ­omy picked up a bit of speed in the sum­mer quar­ter, grow­ing at a healthy 2.8 per­cent rate af­ter ris­ing by 2.5 per­cent in the spring, the Com­merce Depart­ment re­ported Thurs­day.

The un­ex­pect­edly ro­bust per­for­mance sug­gested that the econ­omy is weath­er­ing well the across-the-board cuts in fed­eral spend­ing that cut deeply into de­fense and do­mes­tic dis­cre­tionary pro­grams be­gin­ning in March.

Ev­ery sec­tor of the econ­omy grew dur­ing the sum­mer ex­cept the fed­eral gov­ern­ment. And the fed­eral cuts were off­set some by a 1.5 per­cent jump in state and lo­cal spend­ing, show­ing that the gov­ern­ment sec­tor out­side Wash­ing­ton has re­gained its foot­ing with the re­vival of state tax rev­enues and is now con­tribut­ing to the econ­omy’s mo­men­tum.

While con­sumer and busi­ness spend­ing grew tepidly dur­ing the sum­mer, the star per­former for the econ­omy con­tin­ued to be hous­ing, which soared by 14.6 per­cent. Hous­ing is ex­pected to soften in the fall quar­ter, how­ever, as a re­sult of a sharp rise in mort­gage rates over the sum­mer.

Added to news that un­em­ploy­ment ap­pli­ca­tions fell to pre­re­ces­sion lev­els last week, the faster-than-ex­pected growth pro­vided a short-lived boost to global mar­kets Thurs­day. Stocks ini­tially rose on the news, but later fell as in­vestors re­al­ized that the stronger-thanex­pected econ­omy might prompt the Fed­eral Re­serve to start pulling back on its eas­ing cam­paign.

The Dow Jones in­dus­trial av­er­age plunged by 153 points Thurs­day from a record high to 15,594, while other ma­jor stock in­dexes lost more than 1 per­cent of their value.

Econ­o­mists were cheered by the econ­omy’s pick-up in mo­men­tum, but were cau­tious in in­ter­pret­ing the re­port.

“The data sug­gests the re­cov­ery was just be­com­ing self-sus­tain­ing in the third quar­ter,” said Justin Wolfers, an eco­nom­ics pro­fes­sor at the Univer­sity of Michi­gan.

But he added that the mo­men­tum that was build­ing in the econ­omy at sum­mer’s end was likely bro­ken in the fi­nal quar­ter of the fis­cal year as a re­sult of the 16-day gov­ern­ment shut­down and debt cri­sis that be­gan Oct. 1.

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