The Economy This Week
Warnings by the Federal Reserve of an economic slowdown had small-business owners cutting back on jobs and capital spending plans, while higher prices are putting a damper on early holiday shopping. Here's a look at this week's economic developments and how they may affect your business.
Small-Business Optimism Down
Triggered by the Federal Reserve's interest rate cut, the nation's small-business owners were more pessimistic about the economy last month, the National Federation of Independent Business reported Tuesday.
The Washington-based lobby group's monthly small-business optimism index dropped 1.1 points to 96.2, with fewer owners planning to increase employment or capital spending in the months ahead. Overall, just three of ten index components improved in October, including plans to raise inventories, expected credit conditions, and earnings trends.
"Things were looking good until September 18 when the Fed warned that the economy was sinking," William Dunkelberg, the group's chief economist, said in a statement. "The logical response of small-business owners was to cut hiring, capital spending, and other growth-related activities."
Retail Sales Slow
Sales at the nation's retail outlets grew by just 0.2 percent in October, down from 0.7 percent the previous month, the Commerce Department reported Wednesday.
Sales of sporting goods, books, and furniture declined last month, while sales of building materials, gas, and clothing picked up.
On Thursday, the Labor Department reported a 0.3 percent gain in consumer prices, led by the sharpest increase in energy prices since May. Excluding food and energy prices, so-called core consumer prices rose 0.2 percent.
Gas Prices Climbing
Average gas prices continued to climb last week, surging by 9.8 cents to $3.111 per gallon -- the highest ever for this time of year, the Energy Information Administration reported Thursday.
Gains were reported in every region, including a 13.5 cent increase in California to $3.663 per gallon, a record-high price for the state.
Jobless Claims Surge
New claims for unemployment benefits jumped by 20,000 last week to 339,000, the Labor Department reported Thursday.
The advance seasonally adjusted insured unemployment rate remained unchanged the previous week at 1.9 percent, with 2.568 million people filing claims.
The biggest gains in new claims last week were in Michigan, North Carolina, and Iowa, while the biggest decreases were in Kentucky, Arkansas, and Pennsylvania.