The economy shrank at an annual rate of 0.1 percent in the October-December quarter, hurt by a sharp cut in defense spending, fewer exports and sluggish growth in company stockpiles. That was much worse than the 3.1 percent growth recorded in the July-September period.But economists predict that the October-December growth figure will be revised Thursday to show a small increase, after exports jumped unexpectedly in December. Economists now forecast that the government will report a fourth quarter expansion of 0.5 percent. Growth will likely pick up a bit in the January-March quarter to an annual rate of 1.5 percent, analysts forecast. That's better than the fourth quarter but below last year's expansion of 2.2 percent.
WASHINGTON (AP) â¿¿ Weekly applications for U.S. unemployment benefits likely stayed at a level that suggests slow but steady improvement in the job market. Economists forecast that applications slipped just 2,000 to a seasonally adjusted 360,000, according to a survey by FactSet. The Labor Department will release the report at 8:30 a.m. EST Thursday. Applications are a proxy for layoffs. When they fall, it suggests that companies are cutting fewer jobs. More hiring may follow. The department said last week that applications jumped 20,000 to 362,000, after falling to near five-year lows the previous week. The increase put applications for unemployment benefits back in the 360,000-to-390,000 range, where they have fluctuated since early last year. Even with last week's jump, they have trended downward recently. The four-week average has declined 7.5 percent since mid-November and fell to a five-year low three weeks ago. Employers added an average of 200,000 jobs a month from November through January. That was up from about 150,000 in the previous three months. In January, the economy added 157,000 jobs. The unemployment rate ticked up to 7.9 percent from 7.8 percent in December. Economists think the rate will slowly decline if hiring continues at last year's monthly pace of 180,000. The unemployment rate fell 0.7 percentage point in 2012. The outlook for the U.S. economy brightened this week after reports showed that Americans are more confident and are buying more new homes. Home prices are also rising steadily, and banks are lending more. Such improvements suggest that the economy is resilient enough to withstand automatic spending cuts that are scheduled to kick in Friday. The spending cuts could slow economic growth and cost 700,000 jobs, according to the Congressional Budget Office. They could also reduce unemployment benefit checks for those out of work for more than six months by about 11 percent, according to the National Employment Law Project. Benefits average about $320 per week nationwide.