New Economic Numbers Could Dampen Recovery Talk

The latest government numbers out Thursday may put at least a temporary damper on talk of economic recovery, with a spike in weekly jobless claims, more foreclosures and an unexpected fall in retail sales.

The private RealtyTrac also reported that foreclosure activity jumped 7 percent in July from June and 32 percent from a year ago. The report said 1 in 355 households with a mortgage has received a foreclosure filing.

Retail sales for the month fell 0.1 percent, the Commerce Department reported. Most economists had expected a gain of 0.7 percent. Meanwhile, initial claims for unemployment benefits increased to a seasonally adjusted 558,000, from 554,000 the previous week, according to the Labor Department. Analysts had forecast a drop in new claims to 545,000, according to Thomson Reuters.

U.S. bankruptcy filings also increased 35 percent over the year until June, the Administrative Office of the U.S. Courts said on Thursday, with about 1.3 million bankruptcy cases filed between July 2008 and June 2009, up from the 968,000 that were filed in the same period a year earlier, it said.

The new data come on the heels of an upbeat Federal Reserve report on Wednesday, in which the central bank held interest rates at record lows and said it would slow the pace of an emergency rescue program to buy $300 billion worth of Treasury securities, shutting it down at the end of October — a month later than previously scheduled.

Mark Zandi, chief economist of Moody's economy.com, said the soft retail numbers in particular were a surprise.

"I had expected an increase in retail sales particularly because Cash for Clunkers really juiced up vehicle sales during the month," he said of the government incentive program that has encouraged thousands of Americans to trade in older gas guzzlers for new, more fuel-efficient vehicles.

Zandi said the news does not derail a series of much more positive reports on the economy. Home sales have been improving, as have exports.

Although most analysts think the economy has finally hit bottom, "it does highlight though that any recovery we do get will be a modest one. The economy is coming back but it's not coming roaring back," Zandi said.

In early trading, major U.S. stock indexes were down on Thursday's weak data, but by late morning they had turned modestly positive on better-than-expected second-quarter earnings from retailing behemoth Wal-Mart.

July's dip in retail sales was a setback after two months of modest sales gains. Excluding autos, sales fell 0.6 percent for the month, worse than the 0.1 percent rise economists had forecast.

The four-week average of initial jobless claims, which smooths out fluctuations, rose by 8,500 to 565,000, reversing six weeks of decline.

Households are working to pay down debt and add to savings, longer-term trends along with little job growth making it "probable that the U.S. consumer will not be much of a help during the early stages of the economic recovery," Joshua Shapiro, chief U.S. economist at consulting firm MFR Inc., wrote in a note to clients.

From NPR staff and wire service reports

Related NPR Stories

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.