[News] JOBLESS WEEK
JOBLESS WEEK
Graphic shows change in weekly jobless claims and employment
level; 1 c x 4 1/2 in; 46.5 mm x 114.3 mm
http://www.star-telegram.com/100/story/1110215.html
WASHINGTON -- A series of gloomy economic reports Wednesday showed
consumers holding tight to their wallets with job losses expected
to mount in the months ahead.
There was one glimmer of good news, however. Lower gas prices and
widespread holiday discounts are giving consumers greater buying
power. Consumer spending, when adjusted for those price drops,
rose last month after five months of declines, the Commerce
Department said.
Late Wednesday, the Federal Reserve granted a request by the
financing arm of General Motors to tap the government's $700
billion rescue fund, bolstering GM's ability to survive.
The Fed said it had approved GMAC Financial Services' request to
become a bank holding company. That designation makes GMAC
eligible to receive a portion of the bailout fund and get
emergency loans directly from the Fed.
Analysts had speculated that without financial help, GMAC would
have had to file for bankruptcy protection or shut down.
Even though consumer spending, adjusted for inflation, rose in
November, economists don't expect consumers to ramp up spending
anytime soon. In part, that's because companies in a wide range of
sectors have been laying off workers.
November's inflation-adjusted increase in spending is "a
temporary, one-month aberration in the downward trend of
consumption," said Brian Fabbri, chief economist at BNP Paribas.
Without adjusting for inflation, the Commerce Department said
consumer spending fell by 0.6 percent in November, the fifth
straight month of decline.
Separately, the Labor Department said the number of Americans who
filed initial claims for unemployment benefits rose to the highest
level in 26 years, though the labor force has grown by about half
since then.
New claims for jobless benefits jumped to a seasonally adjusted
586,000 in the week ending Dec. 20, from an upwardly revised
figure of 556,000 the previous week.
A Labor Department analyst said auto-related layoffs were a key
factor behind the rise in jobless claims. The four-week average of
initial claims, which smooths out fluctuations, rose to 558,000.
That's the highest since December 1982, when the economy was
emerging from a steep recession.
The elevated level of new jobless applications is one of several
signs that the labor market has deteriorated fast in recent
months. The Labor Department said earlier this month that
employers cut a net total of 533,000 jobs in November, sending the
unemployment rate to 6.7 percent, highest in 15 years.
The financial markets took the news in stride. The Dow Jones
industrial average closed up nearly 49 points, to about 8,468.
http://www.star-telegram.com/100/story/1110215.html
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