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Economic Snapshot
Tuesday, November 12, 2013 6:50 AM

The Labor Department reports the economy added 204,000 jobs in October. The nation’s unemployment rate increased to 7.3 percent although the civilian labor force declined by 720,000. The number of unemployed persons stands at 11.3 million. Those who have been out of work for more than 27 weeks were little changed at 4.1 million, or 2.6 percent of the labor force.

Additionally, economic growth increased at a +2.8 percent pace during the third quarter on seasonal business stockpiling of inventory. While a pleasant surprise, Brian Turner, director and chief strategist with Catalyst Strategic Solutions, says it is doubtful that this pace of growth is sustainable.

Consumer credit increased $13.7 billion in September – all on non-revolving credit which jumped $15.8 billion. Entering the vital “holiday season,” Turners suspects that retailers are increasingly concerned over this year’s sales outlook.

“Although a declining unemployment rate should be a boost to consumer sentiment, particularly spending behavior, it has yet to materialize into the economy,” notes Turner.

Turner points out that from 2003-2007, when the unemployment rate dropped from 6.3 percent to 4.4 percent (1.9 percentage points), economic growth averaged +3.1 percent, with consumer spending increasing at a +3.3 percent annual rate. From 2009 to present, the unemployment rate has declined from 9.9 percent to 7.3 percent (2.6 percentage points); yet economic growth is averaging only +2.2 percent.

“Auto sales peaked right before last spring, causing annualized sales to surpass a short-lived 16 million units,” adds Turner. “Since then, sales have retreated to about 15.3 million units.”

The Commerce Department has just reported that its year-over-year personal consumption index increased a very modest 0.9 percent, which Turner says is hardly an encouraging sign going into the holiday season.