Consumers give economy a boost before election
A flurry of data issued Thursday sketched a brightening view of the U.S. economy in the final days before the presidential election.
WASHINGTON — A flurry of data issued Thursday sketched a brightening view of the U.S. economy.
Cheaper gasoline, rising home prices and lower unemployment have given consumers the confidence to spend more. Retailers, auto dealers and manufacturers are benefiting.
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At the same time, many employers remain anxious about the economy, which is why only modest hiring gains are forecast for Friday's jobs report for October. It will be the last major report on the economy before Election Day.
Economists think Friday's jobs report will show the unemployment rate rose to 7.9 percent in October from 7.8 percent in September.
Here's what the reports issued Thursday showed about the U.S. economy:
Americans have taken heart from recent declines in the unemployment rate. They appear increasingly confident that the economy can sustain its modest recovery. That's translating into more consumer spending — the fuel of U.S. economic growth — even though businesses have pulled back and exports have slowed.
Consumer confidence jumped last month. The Conference Board index of confidence reached 72.2, its highest since February 2008, two months into the Great Recession.
The index is still below the level of 90 that's consistent with a healthy economy. But it's up from 40.9 a year ago — the sharpest one-year increase since 1994, according to Robert Kavcic, an economist at BMO Capital Markets. The index's all-time low was 25.3 in February 2009, in the midst of the financial crisis.
Consumers also are spending more at retail stores, a separate report showed Thursday. Sales in stores open at least a year rose 5 percent in October, according to a tally from 21 retail chains by the International Council of Shopping Centers. Some of the increase, though, might reflect higher spending for generators, batteries, water and other supplies in preparation for Superstorm Sandy.
Job growth likely will remain modest. Most companies are reluctant to make major investments in hiring or equipment, economists say.
Economists have forecast that employers added 121,000 jobs last month — too slow a hiring pace to drive down the unemployment rate quickly. The rate has declined in recent months in part because some people have given up looking for work.
Applications for unemployment benefits fell 9,000 to 363,000 last week, the Labor Department said Thursday. That level suggests that hiring is unlikely to pick up much from its current pace of about 150,000 jobs a month.
A report by payroll provider ADP showed that private companies added 158,000 jobs in October, up from 114,000 in September. ADP updated its methodology for the October report. It has frequently diverged sharply from the government's figures.
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