Shobhana Chandra: First Time Unemployment Claims in US Declined!

Fewer Americans filed applications for unemployment assistance last week, while those on benefit rolls dropped to a three-year low, signaling limited improvement in the labor market. First-time jobless claims decreased by 2,000 to 402,000 in the week ended Oct.22, Labor Department figures showed today in Washington. The median forecast of economists in a Bloomberg News survey called for a drop to 401,000. The number of people collecting unemployment benefits fell in the prior week by 96,000 to 3.65 million, the fewest since September 2008. Waning dismissals, which lay the groundwork for gains in payrolls, may forestall cutbacks by consumers, whose spending accounts for about 70 percent of the economy. At the same time, faster hiring is needed to trim unemployment, lift household confidence and spur the recovery. "We're not making much progress," said Robert Dye, chief economist at Comerica Inc. in Dallas. "Unless we see the labor market improve, we won't see income growth. The consumer will remain fundamentally constrained." The US economy grew in the third quarter at the fastest pace in a year, as gains in consumer spending and business investment helped support a recovery on the brink of faltering, Commerce Department figures showed today. Gross domestic product, the value of all goods and services produced, rose at a 2.5 percent annual rate, matching the median forecast of economists surveyed by Bloomberg, and up from a 1.3 percent gain in the prior quarter.