Jobless claims, food prices rise, stalling US economic growth

Associated Press

WASHINGTON

Jobs are scarce, and food prices are likely to stay high through next year, according to new data that reinforced evidence of a U.S. economy stuck in a weak patch.

There was some good news in the spate of reports released Thursday. The U.S. trade deficit narrowed in April after American companies sold more goods overseas and imports fell.

The second-straight month of record exports helped Wall Street end its six-day losing streak. The Dow Jones industrial average gained 75 points to close up for the day. Broader indexes also increased.

But most economists downplayed the impact of the smaller trade gap. They said it was mostly because of temporary factors and focused on other reports that suggest hiring could weaken and growth could slow.

“There is a significant slowdown going on,” said Paul Dales, senior U.S. economist at Capital Economics. “The economy is unlikely to grow at a decent rate anytime in the next year or two.”

Thursday’s data showed:

The number of people seeking unemployment benefits hardly changed for a second-straight week, the Labor Department said. Applications ticked up 1,000 to a seasonally adjusted 427,000 last week. It marked the ninth-straight week in which applications have been above 400,000. That trend represents a setback after applications had been declining all winter.

A wet spring likely will cut the size of this fall’s corn harvest and keep food prices high through 2012, the Agriculture Department said. That would limit consumers’ ability to spend money on other goods. Consumer spending accounts for 70 percent of the U.S. economy.

Exports of U.S. goods and services rose to a record $175.6 billion while imports dipped to $219.2 billion, the Commerce Department reported. But a key reason the U.S. trade deficit narrowed was a 25.5 percent decline in imports from Japan, which is recovering from the March 11 earthquake and tsunami. Most economists expect Japanese factories will rebound in the next few months. That should ease supply disruptions and boost imports.