Spending Flags, Jobless Claims Jump

Source: Dow Jones Newswires
Date: January 31, 2008

Consumer spending grew during December but the increase was much smaller than the surge in the prior month, while income accelerated.

Consumer spending makes up about 70% of U.S. economic activity. Adjusted for inflation, consumer spending in December was flat, according to Thursday's report on income and spending. The data revealed a price index for personal consumption expenditures rose 0.2% in December compared to the prior month. The PCE price index excluding food and energy, or core PCE, also rose 0.2%.

The number of U.S. workers filing new claims for unemployment benefits rose last week to its highest level since October 2005, reversing four straight weeks of declines and signaling renewed softness in labor markets, a government report said Thursday.

Initial claims for jobless benefits increased by 69,000 to 375,000, after seasonal adjustments, in the week that ended Jan. 26, the Labor Department said. That's the highest level since Oct. 8, 2005. The previous week was revised to 306,000 from 301,000.