U.S. consumer spending rose two-tenths of a percent in December as
incomes grew, according to Commerce Department data released Thursday.
Some economists say that fits a pattern showing a gradually recovering
U.S. economy.
Consumer spending is watched closely because consumer demand drives most
U.S. economic activity.
The upbeat spending data may be evidence that an earlier report
indicating that the U.S. economy shrank slightly over the past few
months was a pause before modest growth resumes.
A separate report showed the number of Americans signing up for
unemployment compensation rose by 38,000 to a total of 368,000
applications last week.
Economists say the jump in jobless claims follows a couple of weeks
of improving numbers and probably will not change the unemployment rate,
which will be reported Friday and is expected to stay at 7.8 percent.
The unemployment situation has been improving slowly since the end of
the recession.
Cornell University economics professor Sharon Poczter said current
efforts to cut the jobless rate by cutting interest rates have not
worked well.
"We
see that almost nothing has changed on unemployment; it is exactly where
it was when we started this recession," she said. "We can see that
monetary policy alone will not fix unemployment."
Poczter suggested a better approach would be to reform the U.S.
education system so high schools better prepare workers for the growing
number of high-income, high-tech jobs.
"Our standards for the high school diploma have stayed the same, while
the needed skills for those jobs have increased," she said. "So how
could it possibly be that the high school diploma is sufficient
anymore?"
Poczter said middle class jobs were disappearing and wages for the
remaining jobs were falling even before the economic crisis and the
recent recession accelerated that trend.
