Updated from 10:46 a.m.

Despite the positive headline numbers on a slew of economic reports Wednesday, the data provided something for both the both bulls and bears to chew on.

David Littmann, chief economist at Comerica Bank, said strong consumer spending data, a better employment picture, a jump in durable goods orders and stronger-than-expected manufacturing report have reinforced his view that the economy will grow by 3.5% in the fourth quarter. But others, such as Paul Kasriel of Northern Trust and Drew Matus of Lehman Brothers, aren't ready to celebrate just yet, and both are keeping their fourth-quarter estimates of 1% GDP growth in tact.

To be sure, the data appeared very encouraging on the surface. Initial unemployment claims fell to a 21-month low in the latest week, and consumer spending saw its biggest jump in three months. Meanwhile, the Chicago PMI report showed expansion in October, and durable goods orders jumped 2.8% -- the first increase since July.

Littman said he was particularly encouraged by the personal-spending data, which rose 0.4% in October after falling 0.4% the prior month. He said this reflects continued discounting, a stabilizing job market and improvement in the equity markets.

But Kasriel noted that personal income was up just 0.1% in October, down from a 0.4% rise in September. "We're seeing sequentially this year a slowdown in income growth," he said. "A rise in the savings rate and slowdown in income is not the recipe for strong consumer spending going forward."

While the savings rate fell to 4.2% from 4.4% in the previous month, it is still higher than it was in August. Kasriel added that he also is concerned about an increase in consumer debt and personal bankruptcies and a decline in household net worth this year.

As for the Chicago PMI and durable goods orders, he said while they were positive, it's too early to conclude that a new trend is in place.

Meanwhile, Matus said he is "pretty skeptical" about the durable goods and jobless claims, and he noted that consumer confidence didn't recover as much as some had hoped it would.

Last quarter, Matus said, durable goods orders saw a big spike in the first month but trailed off in the next two months. "So our concern is, if this 2.8% is the spike, then it's a pretty poor spike." He also noted that industrial production fell 0.8% in October, "which doesn't jibe with this number." Furthermore, he noted that the jobless claims are being affected by seasonal distortions and said it's hard to know what the real trend is.

As for consumer sentiment, it recovered from October's lows but was still slightly below economists' expectations and even showed some deterioration from levels seen in early November.

Another slightly discouraging piece of news came from the Federal Reserve. The Fed said in its periodic beige book report that the U.S. economy "grew slowly" in late October and early November, and that capital spending remained "limited." It also noted that the labor market continues to be "soft" in nearly all Fed districts and that most districts reported weak conditions in the manufacturing sector. The services sector was also soft, while retail sales were mixed.

Despite these concerns, however, economists said the data on the whole were surprisingly good. Gerald Cohen, an economist at Merrill Lynch, said he expects consumer spending to hold up well in the fourth quarter, buoyed by additional refinancing. "This data is consistent with our view that ? the holiday season might come in on the strong side of expectations."

Personal spending rose 0.4% in October -- the biggest climb since a 1.1% increase in July. Meanwhile, personal income edged up 0.1% after rising 0.4% in the prior month.

Economists had called for income to rise by 0.1%, with spending up 0.3%.

Real personal consumption expenditures, or PCE, which is a gauge of spending without the impact of inflation, rose 0.2% in October after falling 0.6% in September.

In another positive surprise, initial jobless claims fell by 17,000 in the latest week to a seasonally adjusted 364,000, the lowest level since just before the recession started in early 2001. Economists had expected claims to rise to 383,000.

The four-week moving average, which smoothes out weekly fluctuations, also signaled that the labor market may be stabilizing as it fell by 11,250 to 385,750 -- the lowest in 15 weeks.

The Chicago PMI, meanwhile, came in at 54.3 in November compared with 45.9 in the prior month and better than economists' expectations for a reading of 48.5. A number above 50 is a sign of expansion, while a number below 50 signals contraction.

In addition, durable goods orders rose 2.8% in October -- the first increase since July and much better than economists' 1.8% estimate.

Orders fell an upwardly revised 0.9% in September, after originally being reported down 4.9%. Defense capital goods skidded 17.2% last month, but capital goods excluding military spending rose 4.2%. Orders excluding transportation added 2.4% and nondefense orders excluding aircraft, considered a good gauge of capital spending rose 5.3%.

Wednesday's University of Michigan sentiment survey climbed to 84.2 from 80.6 in October. But sentiment has deteriorated since early November when the index stood at 85 and the final reading came in slightly below economists' expectations.

The current conditions index rose to 93.1 from 92.4 in October, but was down from the 93.8 reported in early November. The expectations index rose to 78.5 from 73.1 in October. That too was down from 79.2 in early November.