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Mixed Reports Show US Economy Still Struggling

New reports issued Thursday show key sectors of the United States economy are still struggling, despite some indications a modest recovery is starting to take hold.

The U.S. Commerce Department said retail sales fell 0.3 percent in December, capping a record decline for retail sales last year.

Consumer spending is a key driver of the U.S. economy and most economists had forecast sales would increase last month after gaining in November.

Meanwhile, the U.S. Labor Department said Thursday that first-time applications for jobless benefits increased last week. The U.S. unemployment rate is at 10 percent, near a 26-year high. However, the number of Americans continuing to claim unemployment benefits fell.

There are also new concerns about the U.S. housing market.

Data compiled by a real estate information services company, RealtyTrac, shows that 2.8 million Americans were in danger of losing their homes last year - a 21 percent increase over 2008 and twice as many as 2007.

The report, released Thursday, warns even more Americans could lose their homes this year.

Still, other reports indicated economic activity is beginning to improve.

The National Retail Federation, a private group that represents many U.S. retailers said Thursday that combined sales for the November-December period increased 1.1 percent over the same time last year.

The months of November and December are part of what is known as the holiday shopping season in the U.S., when many consumers buy gifts to give during the Christmas holiday.

And a second Commerce Department report Thursday found that the country's retailers increased their inventories in November, an indication that they expect sales to increase in the coming months.

On Wednesday, a survey by the U.S. central bank indicated an economic recovery is slowly starting to spread across the country.

The Federal Reserve report said economic conditions "have improved modestly" in 10 of the central bank's 12 regions. But the survey also warned the increase is not leading to the creation of more jobs, and it describes the U.S. labor market as soft.

Some information for this report was provided by AP and Reuters.