A week after the midterm elections and the Federal Reserve’s decision to pump more money into the economy, reports showed that import and export prices rose in October, jobless claims were down for the week, the trade deficit shrank more than forecast in September and the U.S. government posted a smaller budget deficit in October.
But according to Joel Naroff, president and chief economist of Naroff Economic Advisors in Holland, Pa., the seemingly positive data do not point to a new reality since last week.
“The reality is that the recovery is going to require people to spend again. This has got to be a demand-driven recovery," Naroff said. “We’re dealing with a lack of demand, and the increase in prices in food and energy get transmitted directly to the consumer. All it does is give them less money to spend on other things. I’m not so worried that we’re headed toward high inflation as much as it’s going to act essentially as a tax on consumer demand.”
Stocks were higher at market close, with the Dow Jones industrial average up 10.29 points, 0.09% higher, at 11,357.04. The S&P 500 was up 5.31 points, 0.44% higher, at 1,218.71. The Nasdaq index closed up 15.80 points, 0.62% higher, at 2,578.78.
Jobless claims continued their decline this week to a four-month low as the Labor Department reported Wednesday that seasonally adjusted initial claims dropped 24,000 to 435,000, falling for the third time in four weeks. The four-week moving average was 446,500, down 10,000 from the previous week's revised average of 456,500.