Dec. 22, 2005--All signs point to a happy new year, as consumers and business owners shake off the fallout of a devastating storm season. Here's a look at this week's economic developments and how they may impact your business.

Economy Looking Up

With jobless claims falling to pre-Katrina levels, the nation's economy should pick up steam early next year, the Conference Board reported Thursday.

The New York-based research group's closely watched Index of Leading Economic Indicators, a forward-looking gauge of economic activity, rose again in November, by 0.5%, from 1% the previous month. The index had been relatively flat since mid-2004, after gaining strength through most of 2003.

The group's coincident index, a gauge of current economic activity, was also up 0.2% in November, following similar gains in October and bolstered by strong industrial production and employment in the past six months, the group said.

A full seven of 10 indicators tracked by the index saw gains in November, including weekly initial claims for unemployment insurance, consumer expectations, stock prices, and building permits. Vendor performance, weekly manufacturing hours, and new orders for capital goods were down, the index showed.

Although too early to tell, recent signs were "consistent with the economy continuing to expand moderately in the near term," the report said.

Spending More With Less

Also on Thursday, the Commerce Department reported consumers were spending more in November, even as income growth slowed.

At the same time, an inflation measure linked to personal-consumption expenditures dropped by 0.4%, the largest on record, the department said. Though the decline comes largely from lower energy prices, excluding food and energy, core inflation has risen just 1.8% over the past 12 months -- the weakest gains since March 2004, the report showed.

While personal spending rose 0.3%, from a more robust 0.5% in October, factoring out inflation spending jumped by 0.7% in November -- the sharpest increase since hitting 1.1% during a run on discount car purchases in July. Still, retailers are counting on last-minute shoppers to boost tepid sales since Thanksgiving weekend.

Meanwhile, personal income rose 0.3% to $29.8 billion, slowing from a 0.5% increase in October, the report showed. Also down from the previous month were private wages and salaries, along with payrolls at goods-producing industries, manufacturers, and service industries.

Weathering the Storms

Soaring energy prices and a devastating storm season weren't enough to keep the economy down, the Commerce Department confirmed Wednesday, reporting total economic output rose 4.1% form July to September.

The pace of GDP growth, up from 3.3% in the previous quarter, was the fastest in more than a year, driven by consumer spending and businesses outlays, the department said. Excluding gas prices, which soared after Hurricane Katrina struck the Gulf Coast in August, the core GDP inflation rate was a modest 1.4%, the report showed.

Cheaper Materials

Producer prices dropped 0.7% in November, the Labor Department reported Tuesday, following steady gains over the past two months. So-called core prices, which exclude energy and food, rose 0.1%, the department said. Energy prices alone dropped 4.0%, after increased by 4.1% in October. Capital equipment prices, including light trucks, machine tools, and computers, were also down last month.