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U.S. jobless claims rise
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January 3, 2002: 2:25 p.m. ET
Initial claims pass critical 400,000 level again in last weeks of 2001.
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NEW YORK (CNN/Money) - New jobless claims rose in the United States last week, the government said Thursday, but investors' attention will be focused on Friday's unemployment report for December, which economists expect to rise again.
The number of Americans filing for unemployment benefits rose to 447,000 in the week ended Dec. 29 from an upwardly revised 411,000 the prior week, the Labor Department reported, as workers continued to feel the effects of a recession in the world's largest economy.
Economists surveyed by Briefing.com expected 393,000 new claims.
Separately, the Commerce Department reported a 0.8 percent increase in spending on private and public construction in November, and a revised 0.8 percent increase in October, reinforcing the notion that construction is rebounding from a prolonged slump. Economists surveyed by Briefing.com expected spending to be flat in November.
Jobless claims had been below the symbolically important 400,000 level for a few weeks, and their re-entry into that territory could be alarming, but many economists pointed to the volatility of weekly jobless claims numbers.
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CNNfn's Lisa Leiter reports on new jobless claims.
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"If we had any faith in the reliability of these numbers, we'd have to call them disappointing," said Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd. "But we don't, so we won't."
Stocks enjoyed a rally on Thursday with the Dow Jones industrial average hitting its highest level in more than four months.
The Nasdaq rose 65.02 points, or 3.3 percent, to 2,044.27, while the Dow industrials advanced 98.74, or 1 percent, to 10,172.14, for its best finish since Aug. 28. The Standard & Poor's 500 gained 10.60, or 0.9 percent, to 1,165.27.
That rally could extend if investors like the Labor Department's scheduled report on December unemployment. Economists surveyed by Briefing.com expect the unemployment rate to rise to 5.8 percent from 5.7 percent in November. Many expect it to pass 6.0 percent before the labor market heals.
The four-week moving average of new weekly claims, which smoothes fluctuations in the weekly data, fell to 409,750 last week from a revised 418,000 in the prior week, pointing to what some economists see as a sign of stabilization in the labor market.
"We need to keep in mind that this is the time of year when weekly fluctuations can be hard to seasonally adjust," Joshua Feinman, chief economist at Deutsche Bank Asset Management, told CNNfn's Before Hours program. "We may need a few more weeks to sort it out. Overall, the readings we've been getting suggest the deterioration in the labor market is slowing down."
Continuing claims -- the number of people drawing benefits for more than a week -- rose to 3.71 million in the week ended Dec. 22, the last week for which data are available, from a revised 3.67 million the prior week.
To keep consumers spending despite mounting job cuts and a recession some economists think began in March, the Federal Reserve cut its target for short-term interest rates 11 times in 2001 to levels not seen in 40 years.
Whether it keeps up its rate-cutting campaign in 2002 will depend in part on the apparent health of the U.S. economy as measured not only by gross domestic product (GDP), but by periodic data such as weekly jobless claims, the unemployment rate, retail sales and others.
Data in recent weeks have shown signs of hope, but have failed to paint a picture of an unmistakable, robust recovery. Such a recovery might not come for a long time, in fact.
In a research report last week, Banc One Investment Advisors chief economist Anthony Chan compared data of the four-week moving average of weekly jobless claims with the same average of continuing claims in previous recessions and expansions. Based on historic patterns, Chan said, the data suggest we may be near the end of the current recession.
But "one should not assume that projecting the end of a recession automatically implies robust economic growth," Chan wrote. "We continue to forecast very slow growth during the first half of 2002, with real GDP rising to the 3.0 to 3.5 percent growth range during the second half of the year."
Click here for CNN/Money's economic calendar
GDP shrank in the third quarter and could do so again in the fourth quarter, many economists expect, matching the standard definition of a recession.
One aspect of the economy on the mend near the end of the year was construction spending, led by a big jump in spending on public projects, which rose in November to an annualized rate of $215.1 billion from a revised $205.6 billion in October.
Construction spending on housing projects fell to a rate of $277.5 billion from a revised $279.1 billion in October. Spending on non-residential private projects rose to $197.7 billion from $196.8 billion.
Altogether, construction spending rose to an annualized rate of $865.1 billion in November from $858.6 billion in October. 
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