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Economy rises, but consumers still wary

WASHINGTON — The economy is being boosted by higher retail sales, stronger factory output and a rise in companies' stockpiles.

That picture emerged from reports Friday pointing to an economy that's improving modestly but steadily after the worst recession in decades. Yet the recovery needs stronger job creation, and it remains under pressure from fears that Europe's debt crisis could slow the U.S. economy.

"The decent gains in payroll employment in recent months have improved the outlook for spending," said Paul Dales, an economist at Capital Economics. But Dales said he expects a subpar recovery because of high unemployment, tight credit and still-high debt loads.

Here is a summary of reports released Friday that point to continued recovery:

Retail sales

The Commerce Department reported that retail sales rose 0.4 percent last month. The result was off from March's 2.1 percent gain, but that surge was boosted by an early Easter holiday and auto incentives. For the first three months of this year, retail sales have grown at the fastest pace in three years.

Industrial production

Industrial production posted an 0.8 percent gain in April, as factories, the biggest slice of industrial activity, ratcheted up output by a brisk 1 percent for a second straight month, the Federal Reserve reported. Manufacturers are boosting production because companies are starting to restore their depleted stockpiles of goods.

Inventories

Business inventories rose 0.4 percent last month, the Commerce Department said, the third straight monthly gain. And total business sales gained 2.3 percent — the sixth straight increase and the best showing in four months.

Despite the collection of positive news, consumers and businesses appear less confident than in previous recoveries. Complicating the outlook is the uncertainty in Europe, which has put the brakes on U.S. markets' gains over the past couple of weeks.

Economists also worry that spending could falter in the coming months without more growth in income.

Economy rises, but consumers still wary 05/14/10 [Last modified: Friday, May 14, 2010 8:47pm]
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