With the backdrop of mixed economic signals in recent weeks, two reports this week suggest some good news for U.S. consumers.
The weekly report on initial claims for unemployment insurance declined in the latest week, to 259,000 from 277,000, bringing the four-week average down to 267,500 from 270,000. The four-week average has been below the important 300,000 level for 10 straight months. A low level of unemployment insurance claims suggests employers are not laying people off as quickly and is a positive sign for the labor market. That’s in addition to the upbeat monthly jobs report we got from the Bureau of Labor Statistics last week.
On the inflation side, retail gas prices may have ticked up slightly in recent weeks, but the latest reading on crude oil stocks in the U.S. suggest prices are likely to remain tame. Crude oil stocks excluding the Strategic Petroleum Reserve are at a record level. By looking at the chart below, you can see what tends to be an inverse relationship between crude stocks and gas prices. And when gas prices are low, Americans tend to feel better about the economy. That optimism is usually good for consumer spending:
The combination of a positive outlook for the labor market and low energy prices are two positive signs for consumer spending and the overall economy.
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