WASHINGTON — The economy may have a long way to go, but at least two big threats are fading.
Economists are less worried that the U.S. will experience another round of mass layoffs and its first bout of deflation since the 1930s after the release of two government reports Thursday.
The third drop in jobless claims in four weeks and a mild uptick in wholesale prices in August add to evidence that a second recession is unlikely.
Concerns about another downturn intensified last month when jobless claims spiked past the half-million mark. Wholesale prices, meanwhile, fell in early summer for three straight months. But those trends have, for now, reversed themselves, leaving an economy that is still growing, but at a pace too slow to create many jobs.
First-time applications for jobless benefits fell by 3,000 to a seasonally adjusted 450,000 last week, the lowest level in two months, the Labor Department said Thursday.
Despite the drop, initial claims for unemployment benefits are above levels that would signal a hiring boom. In a healthy economy, claims usually fall below 400,000.
Also Thursday, the Commerce Department said the broadest measure of the U.S. trade deficit widened for the fourth straight quarter. The current account trade deficit grew to $123.3 billion in the April-to-June period, a 12.9 percent increase from the first quarter. A year of growth could be viewed as a healing sign for the U.S. economy as Americans slowly regain their appetite to spend. That pushes up imports and widens the deficit.
