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Dollar rises as investors seek safety
Number of initial filers for unemployment insurance was unchanged last week at 505,000.
NEW YORK (CNNMoney.com) -- The number of first-time filers for unemployment insurance was unchanged last week, holding at the lowest level since January, said a government report released Thursday.
There were 505,000 initial jobless claims filed in the week ended Nov. 14, the same as the revised figure the previous week, the Labor Department said in a weekly report.
A consensus estimate of economists surveyed by Briefing.com expected 504,000 new claims.
The 4-week moving average of initial claims was 514,000, down 6,500 from the previous week's revised average of 520,500.
"After two hefty declines, claims were due a pause this week," said Ian Shepherdson, economist at High Frequency Economics, in a research note.
"Even when the underlying trend is clear, claims tend not to run in the same direction week after week," Shepherdson added.
Claims are "heading in the right direction," Shepherdson said, and he believes employment will level off in the first half of next year -- possibly as soon as the end of the first quarter.
Continuing claims: The government said 5,611,000 people filed continuing claims in the week ended Nov. 7, the most recent data available. That's down 39,000 from the preceding week's ongoing claims.
The 4-week moving average for ongoing claims fell by 83,500 to 5,711,500.
But the slide in continuing claims may signal that more filers are falling off those rolls and into extended benefits.
Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, nor people who have exhausted their benefits.
State-by-state data: Only one state reported a decline in initial claims of more than 1,000 for the week ended Nov. 7, the most recent data available.
Claims in Florida fell by 1,915, which a state-supplied comment attributed to fewer layoffs in the construction, trade, service, manufacturing and agriculture sectors.
Eighteen states said that claims increased by more than 1,000. Michigan reported the most new claims with 6,001; New Jersey's rose by 4,153; Pennsylvania saw a jump of 3,552; New York had 3,508 new claims; and Ohio's increased by 3,292.
Mixed forecasts for holiday spending
This season is presenting a fuzzy picture as economists gather into bull and bear camps.
NEW YORK (Fortune) -- The stock market is up. Consumer confidence is down. Unemployment is way up. Gas prices are down.
Economists trying to predict consumer shopping habits for the upcoming holiday season -- never an easy task -- are facing a particular challenge this year: a pile of conflicting data.
That has created a sharp divide between bulls, who say a booming stock market and record Wall Street bonuses will feed pent-up demand, and bears, who argue that soaring unemployment and static wages will keep a lid on spending.
"Clearly, there are a lot of different tea leaves floating around," says Craig Johnson, president of Customer Growth Partners, a retail consulting firm.
Economists aren't the only ones stumped by the conflicting signals. Luxury firm Richemont told analysts on a recent conference call that the upcoming Christmas season would be "difficult to predict."
That uncertainty has led some retailers to curtail orders for the holiday season, potentially leaving them short of goods if demand turns out to be stronger than expected.
Analysts are generally calling for retail sales to either fall no more than 1% or rise no more than 2.4% during the November-December period. But even within that narrow range there is disagreement about how the consumer will behave. Helping to muddle the picture are some contradictory economic indicators.
Take retail sales, for example. The widely watched measure was stronger than expected in September and October. Moreover, U.S. Commerce department figures released on Monday showed a surprising uptick in apparel sales -- a category that had been hard hit during the recession.
Yet, sales of big ticket items, like furniture, have yet to rebound, suggesting the consumer is still fragile and prompting the National Retail Federation to characterize October's results as a "mixed bag." The conflicting signals make it "hard to gauge how the holidays will play out," says Rosalind Wells, the NRF's chief economist.
Also troubling: Early reports point to a slowdown in spending for the first two weeks of November. "There are days that are strong, but in an overall environment of weakness, which makes the numbers harder to read," says Michael Niemira, chief economist for the International Council of Shopping Centers.
Niemira is currently calling for retail sales to rise 1% to 2% during the November-December period, but plans to update his forecast following the post-Thanksgiving weekend, which accounts for a large chunk of holiday spending.
Also clouding the picture is the unemployment rate, which at 10.2% in October, is the highest since April 1983. Analysts don't expect the figure to fall to pre-recession levels anytime soon, which is one reason why Fitch, the credit rating agency, is calling for sales to remain flat this holiday season compared with a year ago. Even here there is a silver lining, though: initial jobless claims have begun to decline, suggesting that unemployment may have hit its peak.
And despite the booming stock market and the promise of fat Wall Street bonuses, consumer confidence continues to erode. In October, the Conference Board's present situation index hit its lowest level in 26 years.
"There are some mixed messages out there going into the holiday season," says Stacy Janiak, who leads the retail practice for Deloitte.
One of them is Deloitte's consumer spending index. The measure has increased for the past four months, meaning that consumers have more cash to spend. But instead of lavishing it on clothing, cars or furniture, they are using the money to pay down debt.
Two big unknowns further complicate this year's estimates: the effect that pending health care legislation will have on the economy and whether the recent consumer frugality will outlast the recession.
"Some of the habits formed over the last few months have a certain amount of permanence," Janiak says. "But if you look back at history, U.S. consumers don't do well with long periods of austerity."
It's not unusual for mixed signals to abound when the economy changes direction, either heading into or out of a recession. What is different this time is the slow pace of the recovery. "Most people are used to the economy taking off after a recession," Janiak says.
Despite the overhanging gloom, some analysts say they are starting to see more positives than negatives. "It's been choppy," Johnson, of Customer Growth Partners, says. "But we did see a turn in consumer spending that started about six weeks ago."
That uptick is one reason why Johnson is predicting a 2.4% rise in holiday spending, making his one of the more buoyant forecasts in circulation. The next few weeks will show whether that optimism is justified -- or just another holiday wish.
Poll: More blame Democrats for recession
Number of Americans who hold the GOP exclusively responsible for the recession is steadily falling.
WASHINGTON (CNN) -- Nearly two years into the recession, opinion about which political party is responsible for the severe economic downturn is shifting, according to a new national poll.
A CNN/Opinion Research Corp. survey released Friday morning indicates that 38% of the public blames Republicans for the country's current economic problems. That's down 15 points from May, when 53% blamed the GOP.
According to the poll, 275 now blame the Democrats for the recession, up 6 points from May. Twenty-seven percent now say both parties are responsible for the economic mess.
"The bad news for the Democrats is that the number of Americans who hold the GOP exclusively responsible for the recession has been steadily falling by about two to three points per month," said Keating Holland, CNN polling director. "At that rate, only a handful of voters will blame the economy on the Republicans by the time next year's midterm elections roll around.."
Thirty-six percent of people questioned said that President Barack Obama's policies have improved economic conditions, with 28% feeling that the president's programs have made things worse, and 35% saying what he's done has had no effect on the economy.
One reason for that, Holland said, may be the growing federal budget deficit: Two-thirds say that the government should balance the budget even in a time of war and recession.
The survey indicates that only 18% said the economic conditions in the country today are good, down 3 points from August. Eighty-two percent said economic conditions are poor.
"Some economic indicators may suggest that the economy has turned the corner -- but try telling that to the American people," Holland said.
The number of Americans who said the economy is in good shape -- a number that grew steadily through the spring and summer -- has now stalled, with fewer than one in five expressing a positive view of current conditions. More than eight in 10 say that economic conditions are in poor shape, with 43% calling them very poor.
The CNN/Opinion Research Corp. poll was conducted November 13-15, with 1,014 adult Americans questioned by telephone. The survey sampling error is plus or minus 3 percentage points.
2010 outlook: Flat is the new up
After the doom and gloom of 2008 and heady gains of 2009, experts think next year might be a calm, boring one for stocks. There's nothing wrong with that.
NEW YORK (CNNMoney.com) -- If 2008 was the year the stock market almost died and 2009 was the year that the market miraculously sprung back to life, then what will 2010 be?
It could wind up being a boring, relatively stable year. And you know what? There's nothing wrong with that.
Some market experts think that after last year's despair and this year's glee, everyone may take a deep breath and realize that the economy is neither sinking to an abyss nor on the road to a robust recovery.
"I think the market could fall a bit or stay flat during the first half of the year since the economic outlook is still relatively weak. But I'm looking for a strengthening economy sometime in the middle of next year since interest rates should stay low," said Doug Ober, chairman and CEO of Adams Express (ADX) and Petroleum & Resources (PEO), two closed-end funds that invest mainly in U.S. stocks.
Ober said that he's hoping to take advantage of any pullback in the markets over the next few months, particularly in the technology and consumer sectors.
He said that Microsoft (MSFT, Fortune 500) and Intel (INTC, Fortune 500), for example, should benefit from the launch of Microsoft's Windows 7 operating system.
As for consumers, Ober said that because he is not expecting a substantial economic rebound, he's steering clear of retailers and investing more in staples like Coca-Cola (KO, Fortune 500), PepsiCo (PEP, Fortune 500), Procter & Gamble (PG, Fortune 500) and Unilever (UL).
John Norris, managing director of wealth management with Oakworth Capital Bank in Birmingham, Ala., agreed that investors shouldn't get too optimistic about next year.
"The economy might experience tepid growth of about 2% next year. With 2% growth, people won't be as quick to put money in the market. We've priced in a good recovery and it might not live up to its billing," Norris said.
But that doesn't mean the market or economy are going to fall apart, Norris added. It just looks like a lot of the easy money has already been made in this rally now that the S&P 500 is up nearly 65% since March.
"This year, you just had to be in the market to do well. Next year will be more difficult. At the end of the year if the S&P 500 is up about 8%, that's probably about the best we can hope for," Norris said.
Norris also said that investors have to be more discriminating in 2010 - especially when considering some of this year's hottest sectors and stocks.
The financial services sector, for example, has surged this year. Nearly all banks have bounced sharply from their depressed lows - regardless of how strong their balance sheets really are. As a result, many bank stocks are significantly more pricey than they were only a few months ago.
So a strong focus on identifying winners and losers in an individual sector, and not betting the ranch on an entire group of stocks, may be one of the keys to successful investing in 2010.
Valuations matter once again as well. The S&P 500 now trades at about 14 times 2010 earnings estimates, according to Thomson Reuters.
That's not absurdly expensive by any means. But back in early April, just as the market was beginning to rally, the S&P 500 was trading at only 11 times next year's earnings estimates.
"Everything was cheap in early 2009. Now you have to be a lot more selective," said Blake Howells, director of equity research for Becker Capital Management, an investment firm in Portland, Ore., with about $2 billion in assets. "That's true for the market as a whole."
The Buzz is going on a break: This is the last column for awhile since I will be out on leave for several weeks. But I just wanted to take this opportunity to thank all the readers who have e-mailed me and contributed to the Talkbacks throughout this year.
I appreciate all the feedback and look forward to incorporating more of your comments into the Buzz columns and videos in 2010. Happy Thanksgiving to all and I hope that everyone has a joyous holiday season.
Gold surges to a fresh record
The precious metal continues its run on concerns about the dollar and economic jitters. Analysts see $1,200 an ounce before year's end.
NEW YORK (CNNMoney.com) -- Gold rallied to an all-time high Monday, climbing ever closer to $1,200 an ounce, as the U.S. dollar slid and investors showed nervousness about the economy.
December gold rose $18 to settle at an all-time high of $1,164.80 an ounce, after climbing as high as $1,173.50 earlier in the session.
The rally came as the dollar weakened against its main trading partners, with the euro climbing 0.8% to $1.4973. A softer greenback makes commodities that are priced in dollars cheaper for investors holding other currencies.
"We're seeing significant dollar weakness, and I think that's the main driver today," said Joe Foster, portfolio manager for the Van Eck Global International Investors Gold Fund.
The weak dollar has sent gold surging more than 10% this month as investors flocked to a safe-haven investment. Demand for gold and other so-called tangible assets, which tend to store value better than equity-based investments, often rises in times of economic uncertainty.
Gold is also being supported by a growing expectation in the market that central banks around the world will move to increase their hoards.
India's central bank bought 200 metric tones of gold from the International Monetary Fund earlier this month, and the central bank of Mauritius bought a smaller amount last week.
"We believe the activity of central banks and seasonal weakness in the U.S. dollar in the final four weeks of the year will sustain the strong rally in gold prices," analysts at Deutsche Bank wrote in a recent research report.
Meanwhile, gold is benefiting from a "break-down of confidence" as investors fret about growing fiscal deficits and the ability of governments around the world to oversee the financial system, Foster said.
Given the current momentum in the gold market, and the growing interest from big investment funds, analysts expect prices to continue rising.
"We might have a bit of a pull-back, but the long-term trend is higher," Foster said. Gold will probably top $1,200 some time in December and could climb to $1,300 early next year, he added.
Economists bullish -- but not about jobs
Despite recent fears of another recession, survey finds top economists predicting stronger growth in 2010. But job gains aren't likely until the spring.
NEW YORK (CNNMoney.com) -- Despite rising fears of the U.S. falling into another recession, a survey of top economists found them more optimistic about growth in the fourth quarter of this year and throughout 2010. But job seekers will have to wait a little longer for employers to start hiring again.
According to the November survey by the National Association of Business Economics, 48 top forecasters now expect the economy to grow at a 3% annual rate during the last three months of this year, up from their prediction of 2.4% growth in October.
The economists also raised their forecast for growth during every quarter of 2010. They now expect a 3.2% rise in economic activity over the course of the next four quarters, up from their previous estimate of 3%.
But the outlook isn't as good for the record 31 million Americans unable to find full-time jobs.
The economists pushed back their expectations for when U.S. payrolls will start to grow again to the second quarter of 2010. They previously had predicted a gain of 12,000 jobs a month in the first quarter.
The nation's unemployment rate hit 10.2% in October -- higher than expected. The continued problems in the labor market, combined with disappointing reports about housing and retail sales recently, have raised concerns about a so-called "double dip" recession.
Despite this, the majority of experts surveyed by NABE said they felt the economy was on track and did not additional help from the government.
Asked if there should be another round of economic stimulus, only 15% said that would be appropriate, while 40% said they would leave the stimulus package approved early this year unchanged.
The other 45% said they would like to see a cut in the stimulus money already approved but not yet spent. Along those lines, 55% of the economists said they are extremely concerned about the amount of federal debt over the next five years
Still, the economists surveyed were slightly more optimistic about a recovery in housing and the likelihood that consumer spending would increase. They were also more bullish about the stock market, forecasting that the S&P 500 will reach 1,199 at the end of 2010, a gain of about 10% from Friday's closing level.