The Week in Review: U.S. Stocks, Unemployment Rise as Dollar Falls

U.S. stocks saw a small gain despite an unexpected rise in jobless claims that disrupted a steadily declining unemployment rate over the past few months. Meanwhile, recent strength in the U.S. dollar turned soft as the currency consolidated towards a more mixed view.

U.S. stocks saw a small gain despite an unexpected rise in jobless claims that disrupted a steadily declining unemployment rate over the past few months. Meanwhile, recent strength in the U.S. dollar turned soft as the currency consolidated towards a more mixed view.

More mixed indicators of American economic conditions came as consumers reported greater confidence despite the growth in unemployment. Economists believe the combination of falling energy prices, a stagnating CPI, and flat wages is boosting consumer spending power. This trend may become the driving factor in U.S. economic growth in 2015.

Unemployment Rises

More people are filing for unemployment benefits in a sign that more firms may be letting workers go. According to the Department of Labor, jobless claims rose by 12,000 to 290,000 in the week ending November 8th, up from the prior week to its highest point since the end of September. The 4-week average for claims rose to 285,000, up 2.2% from the prior week’s reading.

The Bureau of Labor Statistics reported this week that job openings rose 20% year-over-year to 4.7 million in September, a deceleration from last month’s growth rate as month-over-month total job openings fell by 35,000.

Quits rose substantially year-over-year in September, rising 17.2% year-over-year to 2.99 million, but were down month-over-month from 3.25 million in August. Often, quit rates are an indicator of worker confidence and can be a proxy for how much slack remains in the labor market.

Layoffs rose 1.3% month-over-month in November to 1.8 million as the total separation rate rose 3% year-over-year and month-over-month.

U.S. Dollar Mixed

The dollar had mixed trading over the week, as it held recent gains but did not add more amidst speculation that Japan will see strong third quarter GDP growth and the UK will see a boost to UK earnings.

Meanwhile, U.S. stocks were buoyed as earnings season continued and many companies reported above expected earnings and revenue growth. Of the 461 S&P 500 countries to report earnings so far, 70.6% had earnings above expectations and over half beat revenue estimates. On Thursday, Wal-Mart posted better-than-expected earnings in a surprising sign that retail spending is gaining momentum.

Consumer Confidence

U.S. consumers are spending more and are growing more confident about their purchasing power. According to a new Bloomberg study, consumers have grown more confident than at any point since January 2008, with greater optimism about economic conditions including purchasing power and personal financial stability.

Many analysts believe the combination of declining oil prices and low inflation are offsetting stagnant wages to boost U.S. consumers.

Earlier this month, the University of Michigan announced that consumer sentiment had reached a 7-year high, beating analysts’ expectations. Economists hope that consumer confidence will drive revenue growth in 2015, after several years of stagnation for companies and consumers alike.