US Economy: Mixed Signals

Posted January 26th, 2012 at 10:10 am (UTC-5)
Leave a comment

The sluggish U.S. economy produced mixed signals Thursday about how fast it is advancing.

The U.S. government reported that orders for durable goods — those designed to last at least three years — surged 3 percent in December, suggesting that manufacturing is a strong segment of the national economy. Orders for cars, commercial airplanes, machinery, communications equipment and primary metals fueled the increase, the second straight monthly gain.

But in another report, the government said that the number of U.S. workers making their initial claims for jobless aid increased 21,000 last week to 377,000, after falling to a nearly four-year low the previous week. New applications for unemployment assistance have steadily fallen in recent months, averaging about the same number as last week's total.

But economists say that the 8.5 percent national unemployment rate will not decrease much until the number of new requests for jobless aid falls consistently below 375,000, to signal that hiring has picked up. About 13 million U.S. workers are unemployed. While the labor market has improved in recent months, the country has struggled to replace the 8.7 million jobs lost during the recession from 2007 to 2009, the worst in the U.S. since the 1930s.

The country's central bank, the Federal Reserve, announced Wednesday that it is keeping its benchmark lending rate near zero through late 2014, its latest attempt at boosting the national economy. At the same time, however, it trimmed its projection for the U.S. economy this year, saying that it may only advance by as much as 2.7 percent, down from an earlier 2.9 percent prediction.