http://www.reuters.com/article/topNews/idUSN1554831920090915
By
Lucia Mutikani
"WASHINGTON (Reuters) - U.S. retail sales rose at the fastest pace in 3-1/2 years in August and a gauge of New York State manufacturing hit a near two-year high, offering hope of a solid recovery from recession.
A separate report on Tuesday showed prices received by U.S. producers rose more than expected last month, suggesting business was improving.
Federal Reserve Chairman Ben Bernanke said on Tuesday the longest and deepest recession since the 1930s was likely over.
"Even though from a technical perspective the recession is very likely over at this point, it's still going to feel like a very weak economy for some time," Bernanke said in response to questions after an address at a Brookings Institution conference in Washington.
The Commerce Department said retail sales climbed 2.7 percent after declining 0.2 percent in July. It was the biggest monthly advance since January 2006 and well above expectations on Wall Street for a 2 percent increase.
"Retail sales show the recovery is here. This wasn't just autos, it wasn't just gasoline. This was the U.S. consumer getting out of their foxhole," said T.J. Marta, market strategist at Marta on the Markets in Scotch Plains, New Jersey. "This is indisputably a good number."
The strong data pushed prices of U.S. government bonds lower, but stocks, already trading around an 11-month high on hopes of economy recovery, had trouble gaining traction and major indexes were down slightly.
Economists are generally in agreement that the U.S. economy is in the early phase of recovery from the worst recession in seven decades. But many remain worried about lackluster consumer demand, with rising unemployment decimating incomes.
The Federal Reserve will consider the data at a meeting next week at which officials will resume debate on how best to withdraw the extraordinary support they are providing the economy. One official has already questioned whether the central bank should move ahead with all its planned support.
MORE SHOPPING, LESS DEBT?
Sales were bolstered by the government's "cash for clunkers" program, which gave consumers cash to swap aging gas-guzzling cars for new, more fuel-efficient models.
Motor vehicle and parts sales surged 10.6 percent last month, the biggest rise since October 2001. Rising gasoline prices also added to the increase in overall retail sales.
The report, however, showed strength across most sectors, with the exception of furniture and building materials, evidence that household spending, which normally accounts for about 70 percent of U.S. economic activity, was probably on the mend.
Excluding motor vehicles and parts, sales jumped 1.1 percent in August after falling 0.5 percent in July."
