US spending, incomes stagnant

WASHINGTON – Consumer spending fell in October for the first time in five months as superstorm Sandy choked off car sales, suggesting slower economic growth in the fourth quarter. The Commerce Department said on Friday consumer spending fell 0.2% after a 0.8% increase in September. It said Sandy had impacted on income growth last month, but it had made adjustments to wages for storm-related work interruptions.

Unemployment jumped by 70,000 in the three months to the end of February, amid the lowest growth in pay rises since 2001, as pressure mounts on George Osborne to adopt a more aggressive growth strategy, reports The Guardian.

The drop in personal income last week got some media attention, particularly given that it was the largest one-month drop in 20 years.

The US consumer spending in December was slower, while incomes increased. MasterCard with higher than expected revenue in Q4. Royal Dutch Shell reported weaker results in the final quarter of 2012. AstraZeneca’s CEO with lower expectations on profit for 2013.   

As I noted in an article published Thursday morning, the government bought three quarters of a percentage point worth of growth in the third quarter leading several hapless commentators to opine on national television that the U.S. economy was not only on solid footing but was in fact experiencing "above trend" growth.

Weekly U.S. unemployment aid applications fall to 369,000, a level that points to modest hiring. The Labor Department says unemployment benefit applications dropped by 23,000, from a revised 392,000 the previous week. The four-week average, a less volatile measure, rose to 368,000. The figures appear to have stabilized after being distorted in the previous two weeks by seasonal adjustment problems. Applications are a proxy for layoffs. When they fall below 375,000, it suggests hiring is strong enough to lower the unemployment rate.