December 25, 2008

Economists cautious on increased spending

Consumer spending edged upward in November, the government said, but some economists are hesitant to call the shift an economic resurgence.

Consumer spending drives about 70 percent of the U.S. economy. In November, spending notched up 0.6 percent on an inflation-adjusted basis.

Disposable income also rose, but the rate of falling gasoline prices -- which have helped boost consumer confidence -- will probably slow in the short-term, The Washington Post reported Thursday.

Wachovia economist Sam Bullard said the fundamentals "¦ are still pretty dim.

We're seeing nothing in the economy right now that is going to change that trend, he said.

Behind the spending uptick is a wobbly job market. First time unemployment claims rose to their highest level in 26 years this week.

People are nervous their job could be at risk, said investment analyst Ed Hyland at J.P. Morgan Private Bank.