Data Suggests Economic Limbo

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A flurry of economic data was released today, but it doesn't all point in the same direction. Jobless claims are good news. Personal spending and incomes are too. Durable goods orders, however, are disappointing. With economic indicators so mixed, I think it's pretty clear we're still in limbo between recession and recovery.

First, jobless claims were probably the best news. Bloomberg reports:

Initial jobless claims declined to 466,000 in the week ended Nov. 21 from 501,000 a week earlier, Labor Department figures showed today in Washington. The number of people collecting unemployment insurance dropped in the prior week, while those getting extended payments also declined.

That's the lowest level of jobless claims since September 2008. Unless it's a just a blip, jobless claims definitely appear to be moving in the right direction. But we'll know more about the unemployment picture next Friday when the November unemployment statistics are released.

Spending and incomes are also positive. Fox Business says:

The Commerce Department said personal spending rose 0.7% last month, beating economists' forecasts for a 0.6% increase. The government also said personal income increased 0.2% in October, doubling estimates for a 0.1% rise.

Both those numbers beating expectations is great news, particularly personal income. Better spending indicates higher consumer confidence, which was also reported separately yesterday as well.

But then there were durable goods orders. They were down. MarketWatch reports:

Orders for U.S.-made durable goods fell in October, declining 0.6% on weaker demand for machinery and defense goods, the Commerce Department reported Wednesday.


Excluding transportation goods, orders fell 1.3%. Economists surveyed by MarketWatch had expected a gain of 0.5% for durable-goods orders, and a gain of 0.4% for orders excluding transportation.

I find this data particularly troubling. I've maintained the view that businesses are most likely to lead recovery, since consumers will likely suffer from prolonged high unemployment. But if durable goods orders are declining, that implies that business spending will also be lower.

Although it wasn't reported today, housing should also enter the picture -- and makes it even murkier. Monday, I noted that sales are up, but mostly due to government incentives. Meanwhile, the National Association of Realtors reports existing home sales prices are declining. Yet, S&P/Case-Shiller index indicates that home values are actually increasing.

So what do we make of all this? That a full-fledged recovery isn't here quite yet. The economy seems confused. One month you have good business news with bad consumer data. The next you have positive consumer indicators with poor business activity. Once a real recovery begins, we'll see all of these indicators point in the same direction. We just aren't there quite yet.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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