U.S. Jobless Claims Fall Sharply

The number of people seeking unemployment benefits for the first time plummeted last week to 352,000, the fewest since April 2008, the Labor Department said Thursday. The decline added to evidence that the job market is strengthening.

Weekly applications fell by 50,000, the biggest drop in the seasonally adjusted figure in more than six years. The four-week average, which smooths out fluctuations, dropped to 379,000. That was the second-lowest such figure in more than three years.

When weekly applications fall consistently below 375,000, it usually signals that hiring is strong enough to push down the unemployment rate. A department spokesman cautioned, however, that volatility at this time of year is common.

Separately, the department said consumer prices were unchanged last month, the latest sign that inflation remains tame. Lower gasoline prices offset rising costs for food, medical care and housing.

The Consumer Price Index was flat in December for the second straight month, the government said. Excluding volatile food and energy costs, so-called core prices rose 0.1 percent.

Inflation appears to be peaking after rising steeply last year. Prices rose 3 percent in 2011, up from a 1.5 percent pace in 2010 and the most since 2007. But that was down from the 12-month increase of 3.9 percent in September.

Lower inflation gives consumers more spending power, which bolsters growth. It also gives the Federal Reserve more leeway to keep interest rates low and take other steps to strengthen the economy.

Many economists say inflation has peaked and that they expect the rate to decline this year. The prices for oil and many farm commodities, such as corn and wheat, have declined. That has brought down the price of gasoline and slowed food inflation.

The Federal Reserve projects consumer price inflation will fall from about 2.8 percent in 2011 to roughly 1.7 percent this year.

In another economic report Thursday, the Commerce Department said builders ended 2011 with a third consecutive year of dismal numbers of new homes started and the worst on record for single-family home building.

In December, builders broke ground at a seasonally adjusted annual rate of 657,000 homes, the Commerce Department said. A third consecutive monthly increase in single-family home building was offset by a drop in volatile apartment construction.

For the entire year, builders began work on 606,900 homes. That was slightly better than in the previous two years. But it was only about half the number that economists equate with healthy markets.

Construction began on 428,600 single-family homes in 2011. It was the fewest on records dating back a half-century. Single-family homes are key to a housing rebound because they account for roughly 70 percent of the market.

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