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Posted on 12/15/2001 3:45:41 PM PST by Lady In Blue

Fewer Layoffs Seen as Analysists Forecast Late-Spring Recovery

WASHINGTON-Retail sales plunged by a record 3.7 percent last month as the holiday shopping season was getting under way. But more recent information looks brighter for the economy,suggesting the huge wave of job layoffs is abating.

Noting the new government reports Thursday,analysts said they still believe the current recession,the country's first in a decade, will be a mild one that will be over by late spring.

The Commerce Department report on retail sales showed the big decline in November following an even larger increase of 6.4 percent in October.Both figures were records under the government's curent tracking system,which goes back to 1992.

Both months were whipsawed by auto sales,which soared in October as dealers offered zero-rate financing deals to lure shoppers back into showrooms after the Sept.11 terrorist attacks,only to retreat in November.

In addition to the big swing in auto sales,retail activity in November was also depressed by falling gasoline prices,which pushed sales at service station down.

Without those special factors,retail sales would have posted a 0.1 increase in November.

Analysts said this showed that the consumer sector,which accounts for two-thirds of total economic activity,was not collapsing despite all the bad news this fall--from the terrorist attacks to the layoffs and confirmation that the country is in a recession.

"With the economy in the doldrums and unemployment rising,consumers are being smart.They haven't stopped shopping,they've only stopped buying everything in sight," said Oscar Gonzales,economist at John Hancock in Boston.

The government said new claims for unemployment benefits fell by 88,000 for the first week in December.the biggest decline in nine years,and a hopeful sign,analysts said,that the country may have seen the worst of the layoffs.

Last week's drop pushed the level for new layoffs down to 394,000,significantly below the peak of 505,750 hit in mid-October.

Wall Street was not cheered by the glimmers of an economic rebound,focusing instead on new profit warnings at high-tech companies.The Dow Jones industrial average lost 128.36 points or 1.3 percent,to close at 9,766.45.

A Third report Thursday showed that prices at the wholesale level,led by another big decline in energy costs,fell for a second straight month. The Labor Department said its Producer Price Index dropped by 0.6 percent in November following a 1.6 percent decline in October.

The Federal Reserve cut interest rates for an 11th time on Tuesday,pushing a key rate to its lowest level in 40 years.

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