Jobless claims for benefits fell sharply last week to a near four-year low and retail sales rebounded in November, which could point to a labor recovery momentum for the struggling U.S. economy.
Initial claims for state unemployment aid fell for a fourth straight week, dropping 29,000 to a seasonally adjusted 343,000, the Labor Department said on Thursday. They are now at their lowest level since early October, and within a hair of territory last seen in early 2008.
Another report suggested consumer spending picked up last month despite fears Washington will fail to avoid harsh austerity measures that could trigger a recession. Worries over this “fiscal cliff” hit sentiment hard in early December.
“It is hard to detect material evidence that fiscal cliff uncertainties are weighing on consumer behavior,” said Michael Feroli, an economist at JPMorgan in New York.
A slow but steady improvement in the labor market has helped support consumer spending, which propped up economic growth in the third quarter when business investment sagged.
Economic growth is expected to slow in the fourth quarter, hurt by slower inventory building and a pull back in investment by companies worried about the fiscal cliff.
However, the economy does appear to be moving quickly past the headwinds presented by superstorm Sandy, which hit the East Coast in late October and led to a spike in jobless claims.
The four-week moving average for new claims, which irons out weekly volatility, dropped 27,000 to 381,500.
“The labor market might be improving a bit quicker than expected,” said David Sloan, an economist at 4Cast in New York.
U.S. stocks dipped despite the data. Investors appeared cautious about making aggressive bets in the midst of negotiations in Washington to slow or avoid the $600 billion in spending cuts and tax hike set to take hold early next year.