(Updated with Fed job outlook, personal income and spending data.)NEW YORK ( TheStreet) -- Stocks were rising Wednesday morning after the Labor Department said unemployment claims last week dropped to the lowest level since July 2008. The advance figure for seasonally adjusted initial claims decreased by a higher-than-expected 34,000 to 407,000 in the week ended Nov. 20, from the previous week's upwardly revised estimate of 441,000, encouraging hopes that the labor department may be stabilizing. Analysts were expecting initial claims to rise to 442,000,
Growth in personal income was driven by wage increases. Private wage and salary disbursements increased $33.2 billion in October, compared with an increase of $8.0 billion in September. Government wage and salary disbursements increased $2.5 billion, in contrast to a decrease of $4.6 billion. Other personal income rose $5.1 billion, compared to a $2.8 billion increase in the prior month. Consumer spending accounts for 70% of GDP. Still, Americans are saving more, with personal saving as a percentage of disposable personal income creeping up to 5.7 percent in October, compared with 5.6 percent in September The Personal Consumption Price Index increased 0.2%. Excluding food and energy, the index rose less than 0.1%, reinforcing the Federal Reserve's observation that inflation levels are low. The index is up 1.3% over the year, below the Fed's mandate of 2%. The Fed said it would purchase $600 billion in Treasury securities earlier this month, in a bid to boost growth and employment. Minutes of the November 2-3 policy meeting released yesterday noted that the "progress towards the Committee's dual mandate of maximum employment and price stability as having been disappointingly slow." Minutes showed that members disagreed on the benefits and effectiveness of quantitative easing, even though they almost unanimously voted for the move. The market's response to quantitative easing has so far been skeptical, with yields on long-term treasury's rising defiantly. The Fed has said it would monitor economic data closely and may scale back its asset purchases if the economy improves more than expected. Meanwhile, the Fed's outlook for the economy remains dim for the next two years. Noting sluggish trends in consumer spending and housing and labor market trends, the central bank lowered its GDP growth estimates for 2011 to 3% to 3.6% from its June estimate of 3.5% to 4.2%. GDP growth in 2012 would be in the 3.6% to 4.5% range in 2012 almost in line with earlier estimates. The Fed expects unemployment rate to drop slowly to 8.9% to 9.1% in 2011 and to 7.7% to 8.2% in 2012. -- Written by Shanthi Bharatwaj in New York >To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk. >To submit a news tip, send an email to: email@example.com.