- The Washington Times - Wednesday, November 26, 2008

Government reports painted a bleak picture of the national economy today.

American consumers, a primary pump for the economic engine, cut back their spending by the most since after 9/11, home sales fell to their lowest level since January 1991 and orders to U.S. factories plummeted to more than double what analysts had expected.

The only glimmer of light in an otherwise dark outlook for the economy was a Labor Department report showing that the number of people who continued to claim unemployment insurance dropped to 3.96 million last week from the previous weeks 4.02 million, the highest level in a quarter century.

The unemployment rate stood at 6.5 percent, the highest number in 14 years, and a major reason for the drop in consumer spending.

The numbers from the Commerce Department and the Labor Department made it clear that the country was headed further into a deep recession amid attempts by the government to help consumers and the housing market by providing $800 billion in two separate programs to spur lending for small businesses and loans for credit cards, mortgages and autos.

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At the same time, President-elect Barack Obama has proposed creating 2.5 million jobs over the next two years as part of a stimulus package being prepared by his economic team. His administration takes office Jan. 20.

As an indicator of how consumers are staying away from stores, the Commerce Department reported that spending plunged by 1 percent in October, worse than the 0.9 percent drop that analysts had expected. Fully two-thirds of economic activity depends on consumer spending.

Home sales decreased again last month, this time by 5.3 percent to a seasonally adjusted rate of 433,000 homes the lowest in nearly 18 years, a time when the housing market experienced another steep downturn.

The cost of buying a new house also dropped, with the median price nationwide falling to $218,000, down 7 percent from a year ago and the lowest level since September 2004, the Commerce Department said.

The agency also reported that orders to U.S. factories for major manufactured items what are called durable goods such as autos, aircraft and even home appliances dropped by 6.2 percent in October. Analysts had expected a decline of 3 percent.

On the job front, the Labor Department reported that initial requests for unemployment benefits fell to a seasonally adjusted rate of 529,000 last week from the previous weeks 543,000, which had been revised upward.

But it was clear from the figures that jobless claims remain at recessionary levels. The four-week average, which takes into account fluctuations in the rate, rose to 518,000, the most since January 1983. The economy then was emerging from a steep recession.

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