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Signs suggest better economy if ‘cliff’ is averted

December 22, 2012
By MARTIN CRUTSINGER , THE ASSOCIATED PRESS

WASHINGTON - Fresh signs of a strengthening U.S. economy on Friday suggested that if Congress and the White House can avert the "fiscal cliff," the economic recovery might finally accelerate in 2013.

Consumers spent and earned more in November. And for a second straight month, U.S. companies increased their orders for a category of manufactured goods that reflects investment plans.

In light of the latest figures, some analysts said the economy could end up growing faster in the current October-December quarter - and next year - than they previously thought.

Article Photos

AP PHOTO
In this Nov. 23 photo, a cashier hands a customer his change and receipt during a transaction at a Sears store, in Henderson, Nev. Consumers spent and earned more in November, reflecting a rebound from the disruptions caused by Superstorm Sandy. The Commerce Department says, Friday, consumer spending rose 0.4 percent compared with October. Personal income jumped 0.6 percent, the biggest gain in 11 months.

"I see momentum building," said Joel Naroff, chief economist at Naroff Economic Advisors. "If Washington makes the moves it needs to make, then the economy should pick up speed next year."

That's a big "if." House Republicans called off a vote on tax rates and left budget talks in disarray 10 days before the package of tax increases and spending cuts known as the fiscal cliff would take effect.

Still, helping lift the optimism of some analysts was a government report that consumer spending, which fuels about 70 percent of the economy, rose 0.4 percent in November compared with October. Spending had dipped 0.1 percent in October. But that decline was linked in part to disruptions from Superstorm Sandy.

Incomes rose 0.6 percent in November, the biggest gain in 11 months. It reflected a rebound in wages and salaries, which had been depressed in October. Damage from Sandy in the Northeast prevented some people from working at the end of October and reduced wages at an annual rate of $18 billion.

A separate report Friday showed that a category of durable-goods orders that tracks business investment surged 2.7 percent. That gain followed an upwardly revised 3.2 percent jump in October, the biggest in 10 months.

 
 

 

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