The Washington Post
WASHINGTON — When recessions approach their end, the economic indicators often seem to point up, down and sideways all at once, and that has been the case lately. And while many business executives are still pessimistic about the outlook, others say they are seeing signs of a brighter future.
"There are a lot more people sticking their heads up and saying they are seeing a glimmer of sunshine," Treasury Secretary Paul O’Neill said Wednesday. O’Neill, chairman of Alcoa before becoming secretary, maintains many contacts with business executives.
There wasn’t a lot of sunshine in a report Thursday from the Commerce Department that retail sales fell a record 3.7 percent last month. That reversed more than half the 6.4 percent gain in October that was due to a huge increase in motor vehicle sales powered by automakers offers of no-interest financing. A decline had been expected because auto sales couldn’t sustain their record pace.
Nevertheless, non-auto sales also fell 0.5 percent last month, which had not been anticipated. Part of that drop was due to a 6.3 percent decline in spending at gasoline stations because of sharply falling prices at the pump.
At the same time, the Labor Department provided a much brighter piece of news, saying that only 394,000 people filed initial claims for unemployment benefits in the week that ended Saturday. That was down a whopping 86,000 from the prior week and the lowest in three months.
"If jobless claims remain at that level it would signal the recession is nearing an end," said economist Gerald Cohen at Merrill Lynch &Co. in New York. "However, we don’t think that is yet the case and expect the recession will linger through the winter."
Claims had spiked as high at 535,000 in the week that ended Sept. 29 as firms laid off many workers in the wake of the Sept. 11 terrorist attacks. Since then, claims have moved down erratically, but last week’s dive was wholly unexpected. It also dropped the much less volatile four-week moving average for initial claims to 450,000, well below the level of six or eight weeks ago.
In addition, there were signs that some of those without jobs were finding new employers. The total number of benefit recipients had risen to almost 4 million by the middle of last month before falling to 3.62 million late last month and rising modestly to 3.66 million in the week that ended Dec. 1.
Meanwhile, the so-called insured unemployment rate — the share of workers covered by unemployment insurance who have lost their jobs — fell to 2.8 percent from a high of 3.1 percent.
"Taken at face value, the lower level of initial claims indicates that the wave of new claims precipitated by the events of Sept. 11 have abated," said economist Ken Kim at Stone &McCarthy, a financial markets research firm. "Whether this momentum toward a lower level of claims can build is still a question mark, but at least it’s a start toward an improvement in labor market conditions and the economy as a whole."
Another report released Thursday by the Labor Department showed that producer prices for finished goods declined 0.6 percent last month following a very large 1.6 percent drop in October. Both declines were primarily the result of energy prices moving down by 7.7 percent in October and another 3.8 percent last month.
The department’s index measures changes in the prices producers charge when they first sell a completed item. In many cases these are the same as wholesale prices, but in some instances they are not.
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