WASHINGTON — New claims for unemployment benefits rose more than expected last week, the government said Wednesday, while consumers cut back on their spending for the fifth straight month amid a deepening recession.
The Labor Department reported that initial requests for jobless benefits rose to a seasonally adjusted 586,000 in the week ending Dec. 20, from an upwardly revised figure of 556,000 the previous week. That’s much more than the 560,000 economists had expected.
That’s also the highest level of claims since November 1982, though the workforce has grown by about half since then.
Also Wednesday, the Commerce Department said consumers reduced their spending by 0.6 percent last month, following a 1 percent drop in October.
But the steep plunge in gasoline prices, which is good news for consumers, made the declines look worse.
Excluding price changes, consumer spending would have dropped by 0.5 percent in October and actually risen by 0.6 percent in November. The November increase excluding inflation was the best showing in more than three years.
Analysts attributed the rebound in inflation-adjusted spending to the huge plunge in gasoline prices and aggressive discounting by retailers trying to salvage the holiday shopping season.
Brian Bethune, an economist at IHS Global Insight, predicted that consumer spending would fall at an annual rate of 2.5 percent to 3 percent in the current quarter, following a 3.8 percent drop in the third quarter. That decline was the worst in 28 years.
