American companies are more productive, fewer people are seeking unemployment benefits and service companies are adding jobs. Does this mean the unemployment crisis has finally started to reverse?
Probably not, say economists.
Until consumers consistently start spending more, businesses are unlikely to hire enough people to drive down unemployment, many experts believe.
"We're creating jobs, but it's not enough to ... increase wages measurably," Ellen Zentner, an economist at Nomura Securities, told the Associated Press.
Continuing weakness in consumer spending is one reason why the unemployment rate remained at 9.1 percent for a fourth straight month in October. Despite the sluggish spending, however, weekly applications for unemployment benefits dropped 9,000 to 397,000 nationally, only the third time since April that the figure has dropped below 400,000. California had the largest increase in unemployment (7,176) due to layoffs in the service industry, and Florida had the fewest (2,230), due to fewer layoffs in agriculture, manufacturing, trade, retail and services.
In order to signal sustained job gains, weekly applications for unemployment benefits need to drop to 375,000.
The government’s unemployment figures for October will be released on Friday.
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(Photo: Smith Collection)