More Bad Econ News

The employeement figures continue to be gloomy:

The employment picture remained gloomy as productivity improved but companies held back on hiring, awaiting firmer signs of economic strength, the Labor Department said in its weekly report on jobless claims.

The ranks of the unemployed rose to 3.8 million, the highest since early April 1983, from 3.68 million in the prior week, the Labor Department said.

Initial jobless claims fell in the latest week by 17,000 to 430,000, still above the 400,000 mark that indicates a weak labor market. New claims have been above 400,000 for 16 weeks in a row.

Of course, as is the case with the Weirdness, the news isn't all bad:

Meanwhile, the nation's retail sales rose 0.1%, but would have risen even more had gas prices not declined, the Commerce Department said.

Sales fell 0.3% in April, while excluding autos, they fell 0.9%.

"It appears that consumers have begun to bounce back from the Iraq-induced doldrums," said National Retail Federation chief economist Rosalind Wells.

"What's most encouraging is that discretionary spending is up - clothing, appliances - which indicates consumers are feeling pretty confident," said Stephen Stanley, economist at Greenwich Capital.

Unemployment "is a lagging indicator, but it compels [stock market] traders to feel even more strongly that we're ripe" for an interest rate cut, said Brian Piskorowski, market strategist at Prudential Securities.

Economists said yesterday's economic numbers, along with anecdotes from the Fed's recent "beige book" report, suggested the central bank could cut interest rates by one-quarter point to 1%, a level last seen in the late 1950s when Dwight Eisenhower was president.

Source: NY Daily News

Hat Tip: Drudge.