Jobless claims rise, prices drop
Inflation at consumer level eases, held down by plunge in gas costs
Jose Canales talks to a recruiter as he is accompanied by his wife, Magdel, and daughter Alexamarie at a job fair expo in Anaheim, Calif. More Americans sought unemployment aid last week.
The Labor Department said new claims rose by 6,000 last week. Claims have been trending higher since February, which may have marked a turning point for the U.S. economy.
The four-week average, a less volatile measure, rose for the third straight week to 382,000. That's the highest in six weeks.
"There is very little sign of life," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany, N. Y. Also Thursday the Labor Department said the consumer price index dropped 0.3 percent in May, the most since December, 2008, pulled down by a plunge in gas prices. Excluding volatile food and energy costs, prices rose only modestly.
So-called "core" prices, which exclude food and energy, rose 0.2 percent for the third straight month.
Over the past 12 months ending in May, consumer prices rose 1.7 percent, much less than the pace for the 12 months that ended in April. Core prices have risen 2.3 percent in the past year, the same as for the 12 months ending in March and April. That's close to the Fed's 2 percent target for inflation.
Mild price increases give consumers some relief at a time when unemployment is high and wage gains are meager. Lower inflation also gives the Federal Reserve more leeway to keep interest rates low.
Falling prices have begun to boost Americans' inflated-adjusted pay. Inflation-adjusted earnings rose 0.3 percent in May, the government said, only the second gain this year. That occurred because average hourly earnings rose slightly while prices dropped.
Over the past 12 months, however, inflation-adjusted hourly earnings dipped 0.1 percent.
Expectations that the Fed will take some action when it holds a two-day meeting starting next Wednesday sent stocks soaring Thursday. They surged higher in the final hour of trading after a report said major central banks were prepared to pump money into global financial markets if necessary.
The Dow Jones industrial average jumped 155.53 points to end the day at 12,651.91, a gain of 1.2 percent. Broader indexes also ended the day higher.