As Holiday Season Begins, a Mixed Bag of Economic News

The news from the Commerce Department's Bureau of Economic Analysis was mixed Wednesday. Consumer spending rose in October, but just barely -- an increase of 0.1%, the lowest in four months. (September's increase, by contrast, was 0.7%.) Incomes, however, were up 0.4% -- the best increase since March -- providing consumers and retailers alike something to be thankful for as the holiday shopping season begins.

That income gain amounts to $48.1 billion, or $30.2 billion after subtracting taxes and adjusting for inflation, which could provide a much-needed jolt to the still-staggering U.S. economy. (Consumer spending accounts for 70% of economic activity.) The question is, will consumers spend it? That's far from certain: The savings rate also increased last month, to 3.5% of after-tax incomes -- 0.2% higher than it was in September.

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The news on the all-important unemployment front was similarly conflicted. After two months of declines in the number of applicants seeking unemployment benefits, last week that figure rose, albeit slightly, to a seasonally adjusted 393,000. But the four-week average of these applications, which according to the Associated Press smooths out week-to-week fluctuations, was down to its lowest level since April. "The downward trend suggests companies are laying off fewer workers," the AP reports.

One final piece of relative good cheer for retails was provided by the Thomson Reuters/University of Michigan final index of consumer sentiment, which this month hit its highest level since June -- 64.1, up from 60.9 in October. But even this reading is well below pre-recession levels, which averaged in the high 80s. And a competing measure, the Bloomberg Consumer Comfort Index, was at minus 50.1 in the week ended November 20, down from minus 50 in the previous week. That's a level last seen during the depths of the recession in 2008.