By — PBS News Hour PBS News Hour Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/business-july-dec08-economyroundup_12-24 Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Consumer Spending, Durables Goods Orders Drop as Jobless Claims Rise Economy Dec 24, 2008 10:00 AM EDT The 0.2 percent decline in incomes was the first dip since July and reflected in part the loss of more than 500,000 jobs in November. The government said consumer spending fell by 0.6 percent last month, slightly smaller than the 0.7 percent decrease that economists had expected, according to the Associated Press. It followed a 1 percent fall in October. Factoring in decreasing gas prices actually made the numbers appear worse. Excluding the price changes, consumer spending would have dropped by 0.5 percent in October and risen by 0.6 percent in November, the AP reported. The average price of unleaded regular gasoline at the pump fell by $1 to $2.11 in November from the previous month, according to AAA, reported Bloomberg News. Economists say the overall trend for consumer spending is down because of a deepening recession, a financial crisis that has tightened access to credit for millions of borrowers, and massive job losses. Michael P. Niemira, chief economist for the International Council of Shopping Centers, is forecasting that sales at established stores in November and December will be down 1.5 percent to 2 percent — making this the weakest holiday season since at least 1969, according to the AP. Retailing giant Wal-Mart Stores Inc. is one of the few bright spots in the current environment. Some merchants including Ann Taylor Loft have e-mailed customers promoting after-Christmas discounts that can be enjoyed now. Also Wednesday, the Labor Department reported that initial requests for jobless benefits rose to a seasonally adjusted 586,000 in the week ending Dec. 20, from an upwardly revised figure of 556,000 the previous week. That’s much more than the 560,000 economists had expected. That’s also the highest level of claims since November 1982, though the work force has grown by about half since then. Jobs have been a particular concern for investors. The more people lose their jobs or fear they will lose their jobs, the more they close their wallets. And consumer spending accounts for more than two-thirds of U.S. economic activity. The Commerce Department also reported that orders to U.S. factories for big-ticket manufactured goods fell again in November, reflecting further setbacks in the battered auto industry and a big drop in demand for commercial aircraft. Orders for durable goods fell 1 percent last month, a decline that was smaller than the 3 percent decrease economists had been expecting. However, the decrease was on top of an 8.4 percent plunge in orders in October, which had been the biggest decline in eight years. The weakness in November reflected a 37.7 percent fall in demand for commercial aircraft and a smaller 0.2 percent drop in orders for new vehicles and auto parts. Earlier this week, the government reported that the overall economy, as measured by gross domestic product, was declining at an annual rate of 0.5 percent in the July-September quarter and analysts believe the contraction will accelerate in the current quarter, according to the AP. The economic weakness is helping to keep inflation under control. A price gauge tied to consumer spending fell by a record 1.1 percent in November. Excluding the cost of energy and food, the price index was unchanged last month, the AP reported. Wall Street was narrowly mixed in Wednesday trading, which is considered largely inconsequential in the grand scheme of things. Trading volumes were extremely low ahead of Christmas, and the markets close early at 1 p.m. ET. With only four trading days left in 2008, most buying and selling appears to be investors trying to dress up their portfolios after a year of unprecedented market turmoil. In early trading, the Dow Jones industrial average rose 33.93, or 0.40 percent, to 8,453.42. Broader stock indicators were mixed. The Standard & Poor’s 500 index futures rose 1.17, or 0.14 percent, to 864.33, while the Nasdaq composite index fell 1.34, or 0.09 percent, to 1,520.20. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now By — PBS News Hour PBS News Hour
The 0.2 percent decline in incomes was the first dip since July and reflected in part the loss of more than 500,000 jobs in November. The government said consumer spending fell by 0.6 percent last month, slightly smaller than the 0.7 percent decrease that economists had expected, according to the Associated Press. It followed a 1 percent fall in October. Factoring in decreasing gas prices actually made the numbers appear worse. Excluding the price changes, consumer spending would have dropped by 0.5 percent in October and risen by 0.6 percent in November, the AP reported. The average price of unleaded regular gasoline at the pump fell by $1 to $2.11 in November from the previous month, according to AAA, reported Bloomberg News. Economists say the overall trend for consumer spending is down because of a deepening recession, a financial crisis that has tightened access to credit for millions of borrowers, and massive job losses. Michael P. Niemira, chief economist for the International Council of Shopping Centers, is forecasting that sales at established stores in November and December will be down 1.5 percent to 2 percent — making this the weakest holiday season since at least 1969, according to the AP. Retailing giant Wal-Mart Stores Inc. is one of the few bright spots in the current environment. Some merchants including Ann Taylor Loft have e-mailed customers promoting after-Christmas discounts that can be enjoyed now. Also Wednesday, the Labor Department reported that initial requests for jobless benefits rose to a seasonally adjusted 586,000 in the week ending Dec. 20, from an upwardly revised figure of 556,000 the previous week. That’s much more than the 560,000 economists had expected. That’s also the highest level of claims since November 1982, though the work force has grown by about half since then. Jobs have been a particular concern for investors. The more people lose their jobs or fear they will lose their jobs, the more they close their wallets. And consumer spending accounts for more than two-thirds of U.S. economic activity. The Commerce Department also reported that orders to U.S. factories for big-ticket manufactured goods fell again in November, reflecting further setbacks in the battered auto industry and a big drop in demand for commercial aircraft. Orders for durable goods fell 1 percent last month, a decline that was smaller than the 3 percent decrease economists had been expecting. However, the decrease was on top of an 8.4 percent plunge in orders in October, which had been the biggest decline in eight years. The weakness in November reflected a 37.7 percent fall in demand for commercial aircraft and a smaller 0.2 percent drop in orders for new vehicles and auto parts. Earlier this week, the government reported that the overall economy, as measured by gross domestic product, was declining at an annual rate of 0.5 percent in the July-September quarter and analysts believe the contraction will accelerate in the current quarter, according to the AP. The economic weakness is helping to keep inflation under control. A price gauge tied to consumer spending fell by a record 1.1 percent in November. Excluding the cost of energy and food, the price index was unchanged last month, the AP reported. Wall Street was narrowly mixed in Wednesday trading, which is considered largely inconsequential in the grand scheme of things. Trading volumes were extremely low ahead of Christmas, and the markets close early at 1 p.m. ET. With only four trading days left in 2008, most buying and selling appears to be investors trying to dress up their portfolios after a year of unprecedented market turmoil. In early trading, the Dow Jones industrial average rose 33.93, or 0.40 percent, to 8,453.42. Broader stock indicators were mixed. The Standard & Poor’s 500 index futures rose 1.17, or 0.14 percent, to 864.33, while the Nasdaq composite index fell 1.34, or 0.09 percent, to 1,520.20. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now