NEW YORK – American incomes rose in December by the most in eight years, a positive sign for consumer spending that could help the economy sustain momentum early this year.
Personal income for Americans rose 2.6 percent last month, the Commerce Department said on Thursday. That was the biggest increase since December 2004 and well above analysts' expectations for a 0.8 percent gain.
Personal income rose in November and December, the Commerce Department said, because of special dividends and accelerated bonuses to beat increases in taxes this year. Personal income
The number of Americans filing new claims for unemployment benefits bounced off five-year lows last week, pulling them back to levels consistent with modest job growth.
Initial claims for state unemployment benefits increased 38,000 to a seasonally adjusted 368,000, the Labor Department said on Thursday. The prior week's claims figure was unrevised. Economists polled by Reuters had expected claims to increase to 350,000.
STEVE GOLDMAN, PRINCIPAL, GOLDMAN MANAGEMENT, SHORT HILLS, NEW JERSEY:
"S&P futures firming up a little, we did expect a surge (in claims). We're getting back to the norm there, this was not really surprising news.
"Data will become more important as we are now moving away from headline risk. The environment going forward will likely see improvement in economic reports."
SAM BULLARD, SENIOR ECONOMIST, WELLS FARGO SECURITIES, CHARLOTTE, NORTH CAROLINA:
PERSONAL SPENDING: "Consumers finally realized about the tax increase so they pulled back a bit on their spending during the holiday season.
PERSONAL INCOME: "You had some wage and salary growth. Certainly, there was a distribution of capital with expected increases in taxes on dividends and capital gains."
MARK GRANT, SOUTHWEST SECURITIES MANAGING DIRECTOR IN FORT LAUDERDALE:
"Personal income numbers were substantially better than expected and the jobless claims weren't too far out of line. A rise there was expected and greatly expected by seasonality."
BONDS: Prices for U.S. 30-year Treasuries pared gains. The 30-year bonds pared early gains, with yields spiking as high as 3.1736 percent. Those Treasuries last traded up 8/32 to yield 3.167 percent.
GRAPHIC: U.S. jobless claims: New claims for unemployment rose last week to 368,000, bouncing off a five-year low. For the week ended January 19, continuing claims rose to 3.20 million. http://link.reuters.com/xew34t
(Americas Economics and Markets Desk; +1-646 223-6300)