The rumors of impending economic death still appear to be exaggerated. According to the Labor Department’s figures, spending rose sharply in November as consumer confidence increased. The price of gasoline figured in some of that increase, but even with that factor removed, the rise of spending increased three times from October:
Wholesale prices and retail sales jumped in November and jobless claims fell last week.
Wholesale prices shot up 3.2 percent, the biggest jump in 34 years, propelled by a record rise in gasoline prices. Meanwhile, consumers put aside worries about the weak economy in November to storm into the shopping malls, pushing up retail sales by the largest amount in six months.
The Labor Department reports that new claims filed for jobless benefits dropped to 333,000 last week, an encouraging sign that the job market is holding together despite problems in the economy. ….
Half of the November increase came from a big jump in gasoline pump prices and therefore was not seen as a sign of strength in consumer demand. But there were widespread gains across a number of other areas from department stores to appliance and furniture stores.
Not only is the sky not falling, it seems to be in the same firm place it has always been. The increase is the largest since May. Economists expected only half of that increase even with gas prices figured into their predictions. It appears that the Black Friday numbers were not an anomaly, but indicative of greater confidence by consumers in the market.
Yesterday, the Fed took action to bolster confidence even further. They cut the interest rate and infused significant new cash into the credit system, hoping to stabilize lending while the fallout from mortgage-lender woes continues. That led to a rally on Wall Street, pushing the Dow Jones index above 13,400 again. Not everyone believes that the world has come to an end, apparently.
King Banaian has more on the interesting and complex solution put into place by the Fed. King tends to be more pessimistic than me, but he has excellent and clear-headed analysis at SCSU Scholars.