GREAT ECONOMIC NEWS: Unemployment down; Spending and incomes up

WASHINGTON (AP) – The number of people applying for unemployment benefits fell sharply last week to the lowest level since July 2008, a hopeful sign that improvement in the job market is accelerating.

The Labor Department says that weekly unemployment claims dropped by 34,000 to a seasonally adjusted 407,000 in the week ending Nov. 20. Wall Street analysts expected a much smaller drop.

A Labor Department analyst says weekly claims are volatile during the week between the Veteran’s Day and Thanksgiving holidays.

A key question is whether claims will remain this low in future weeks, or bounce back.

Meanwhile Americans earned more and spent more last month, a hopeful sign for the economy ahead of the holiday buying season.

The government says consumers boosted their spending 0.4 percent in October. That was up from a 0.3 percent increase in September.

People showed a slightly bigger appetite to spend because their incomes rose 0.5 percent, reflecting a slowly healing jobs market. Incomes didn’t grow at all the month before. The increases in both income and spending last month were the most since August.

Even with the pickup, consumers are still shying away from the type of spending needed to dramatically lower the 9.6 unemployment rate.

(Copyright 2010 by The Associated Press. All Rights Reserved.)