WASHINGTON — The number of workers filing new applications for jobless benefits fell slightly last week, reflecting little change in a still-weak labor market. But separate reports showed consumer sentiment reaching the highest level in six months, along with a fractional uptick in personal income against a background of low inflation.
The Labor Department reported that the number of workers filing new applications for jobless benefits fell slightly last week to 420,000. Yet most economists believe claims have to fall toward 400,000 or below on a consistent basis to indicate a faster pace of hiring. The nation's unemployment rate now stands at 9.8 percent; weekly jobless claims peaked at 504,000 in early August.
Even in good economic times, however, weekly claims rarely fall below 300,000 as millions of Americans move in and out of the work force.
The four-week average of new claims inched up to 426,000 from 423,500. The moving average is viewed as a more accurate barometer of employment trends because it smooths out quirks in the weekly data that can give a distorted picture of the labor market.
Year-over-year core inflation stayed at 0.8 percent in November, matching the record low reached in the prior month, according to Commerce Department figures, which go back to 1960. Personal incomes rose 0.3 percent in November, compared with 0.2 percent expected by economists.
"Government measures of inflation continue to be restrained," Dan Greenhaus, chief economic strategist with Miller Tabak, wrote in a research note. "Secondly, and perhaps equally important, is the growth in organic incomes."
Spending gained 0.4 percent, while Wall Street had expected a gain of 0.5 percent. Real disposable incomes rose 0.2 percent in November.
Some analysts have been concerned that the Fed's $600 billion bond-buying program could lead to higher inflation. But recent readings of inflation show that it is below the Fed's target of about 1.6 percent to 2 percent, and central bank officials have reiterated concerns that inflation is somewhat low.
The Reuters/University of Michigan gauge of consumer sentiment climbed to 74.5 in late December, matching estimates from economists polled by Marketwatch, but remains below pre-recession levels of more than 80. The final December result compares with 74.2 earlier in the month, and 71.6 in November.
While consumers' employment expectations have improved, views of their financial situations "have remained quite negative due to the widespread expectation of stagnant incomes," according to the sentiment report.
According to the report, one in four consumers expects personal finances to improve in the year ahead.
"The majority of consumers anticipated no income increases during the year ahead, as they have for a record 24 months," according to the report.