Economy Watch: New jobless claims fall but wholesale prices rise

The number of new jobless claims filed last week dropped by 24,000, in line with forecasts, but wholesale inflation in March jumped twice as much as expected and hit its highest level since September 2008, raising fears that consumer prices might start to edge up.

On unemployment, 456,000 new jobless claims were filed last week, down from 480,000 the previous week, an encouraging sign. The number of continuing claims -- a measure of long-term unemployment -- dropped slightly from 4.68 million to 4.65 million.

The wholesale inflation number in March rose 0.7 percent, more than twice what forecasters expected. The hike came largely from the volatile food and energy prices; if you strip those out, the core wholesale inflation number last month rose by only 0.1 percent.

The price culprit in March was vegetables. Higher prices for greens drove the wholesale inflation number higher.

The wholesale price index has risen 6 percent year-over-year, driven higher by a 23 percent surge in fuel prices. Wholesale food prices are up 6.8 percent in the past year.

Forecasters expected the new jobless claims number to come in at 452,000.

The official national unemployment rate stands at 9.7 percent, unchanged for the past two months.

The four-week moving average of new jobless claims -- which smooths out volatility -- rose last week by 2,750 to 460,250.

Economists says that the number of new jobless claims needs to get down into the low 400,000s before the economy can begin to start creating jobs.

Inflation has so far been a non-factor in this economy during the recession and the recovery, and the Federal Reserve says that it expects inflation to remain low through the remainder of the year.

However, today's unexpected jump in wholesale prices may change that, especially if the costs are passed along to consumers and retail inflation starts to creep upward, something that could really put the brakes on this halting recovery.