Fewer Americans filed for new jobless benefits last week. And
economists say that July's unemployment report due out on Friday could
be another sign that the recession has bottomed out. But even as the
pace of job losses appears to be slowing, U.S. retailers continue to
report disappointing sales.
The U.S. Labor Department says about 550,000 Americans filed new claims for jobless benefits last week. That was down 38,000 from the previous week and below analysts' expectations.
Economist Mark Zandi of Moody's Economy.com says the new claims number is encouraging.
"It indicates that the job market, while still bad, is getting better," he said. "The job losses, while still severe, are abating. And it is all consistent with the idea that this recession is coming to an end."
The drop in jobless claims is giving economists hope that Friday's unemployment report for July will be less severe than has been feared. U.S. unemployment stands at 9.5 percent and many economists expect the rate to top 10 percent in coming months.
But even if the U.S. job market is showing modest signs of stabilizing, Americans are not inclined to spend. With few exceptions, U.S. merchants reported disappointing sales figures on Thursday, with shopping mall retail chains hit particularly hard.
Retail consultant Ken Perkins says Americans are consuming less and saving more. "They are not spending their money right now. Clearly they are continuing to save," he said.
Retail analyst Candace Corlett says consumer confidence has yet to rebound.
"They are still not confident that the economy is any better now than it was a year ago," said Corlett. "They are not confident that it is going to be better next year."
But President Barack Obama's economic team continues to express cautious optimism about the road ahead. Speaking in Washington, the Chairwoman of the president's Council of Economic Advisers, Christina Romer, said a return to economic growth will precede job creation.
"Most forecasters are now predicting that GDP [gross domestic product] growth is likely to turn positive by the end of the year," said Romer. "There is substantial uncertainty to this forecast, and there is greater uncertainty about how strong the recovery is likely to be. Unfortunately, even once GDP begins to grow, it will likely take still longer for employment to stop falling and begin to rise."
Romer said, as turbulent as U.S. economic conditions remain, they would be far worse if a massive $787 billion stimulus package had not been enacted in February.