By Vicki Needham - 06/27/13 12:49 PM EDT
Economists say the market is healthier when applications fall below 375,000, where they have been for most of this year — an indication of steady hiring.
First-quarter growth was revised down to 1.8 percent from 2.4, a sign that the tax hikes that went into effect on Jan. 1 weighed more on consumers' wallets than initially thought.
Thursday's report on gross domestic product (GDP) showed that consumers spent much less than expected through the first three months of the year. Consumer spending represents about 70 percent of economic activity.
But spending numbers looked good in May, rising 0.3 percent last month after a similar loss in April. The increase was helped by higher wages, with incomes rising 0.5 percent, the best pace in the past three months and faster than the 0.1 percent April increase, the Commerce Department reported in a separate report on Thursday.
With higher wages and more spending, they also socked away more money — the savings rate rose to 3.2 percent in May, up from 3 percent in April, the highest level of the year.
Even though growth is expected to slow down in the April-June quarter, there are plenty of positive signs that the economy is plodding along in its recovery.
The housing market recovery is most notable, with home builders' confidence picking up along with sales and prices. But the sector still faces headwinds such as low inventory and tight credit conditions.