Some reasons to be optimistic in this economy

MIAMI – Nov. 30, 2009 – In a hopeful sign for the economy, the number of newly laid-off workers filing claims for unemployment benefits fell below 500,000 last week for the first time since January. In addition, consumer spending also picked up in October, and new-home sales hit their highest point in more than a year.

Combined, the news suggested that the economy should be able to sustain at least a modest rebound, even as some economists have worried that the country might be at risk of slipping back into recession.

There were no local or state figures released with the reports.

The number of people filing first-time claims for jobless aid fell by 35,000 to 466,000, the Labor Department said Wednesday. That was the fewest since September of last year.

Still, analysts noted that jobless claims would have to drop to near 400,000 for several weeks to signal actual growth in employment.

New-home sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists had expected a pace of 410,000 and said the boost was driven by home shoppers acting before lawmakers decided this month to extend a tax credit for first-time buyers and expand it to some existing homeowners.

Consumer spending also rose 0.7 percent last month, following a 0.6 percent drop in September, the Commerce Department said. It was the best showing since a big 1.3 percent jump in August when the government’s now-defunct Cash for Clunkers programs enticed people to buy cars.

“When taken all together, the reports still paint a picture of a slow economic recovery,” said Mark Vitner, an economist at Wells Fargo.

One such sign was that orders for costly manufactured goods fell unexpectedly last month.

Much of October’s weakness came from a big drop for goods related to defense. Excluding those, orders for other types of manufactured goods rose slightly. Still, the overall performance was weaker than economists had expected.

Some analysts also cautioned against reading too much into the sharp drop in unemployment claims.

They noted that part of the improvement reflected large seasonal adjustment factors. Excluding those adjustments, claims rose.

Most economists say the recovery will remain so weak and job creation so slight that the unemployment rate could top 10.5 percent by mid-2010.

Florida’s unemployment rate in October was 11.2 percent, and some economists expect the jobless rate to stay in the double digits through 2012.

Still, taken together, the reports on jobless claims, consumer spending and home sales were encouraging, and the Dow Jones Industrial Average rose 30.6 points on light volume to close at 10,464.

Wednesday’s figures seemed to blunt some fears that consumers would clam up, sending the country into a “double-dip” recession.

Copyright © 2009 The Miami Herald. Distributed by McClatchy-Tribune Information Services. Miami Herald business reporter Jim Wyss and the Associated Press contributed to this report.