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But Dean Maki, an economist at Barclays Capital, pointed out that the decline in unemployment aid applications suggests companies are not too worried about the fiscal drag. He notes they are responding to the government's actions by reducing hiring and cutting back on their employees' hours
-- not laying off workers. That means they anticipate the weakness will be temporary. Even modest job gains could provide consumers with more money to offset the impact of the tax increase. Total wages rose 3.6 percent in April compared with a year earlier. That's comfortably ahead of the 1.5 percent inflation rate. The economy grew at an annual rate of 2.5 percent from January through March, a big improvement from the anemic growth of 0.4 percent in the final three months of last year. But most economists expect growth will slow in the current quarter to 2 percent or lower. About 4.9 million people collected unemployment aid in the week that ended April 20, the most recent period for which figures are available. That's about 90,000 fewer than the previous week.
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