August 13, 2004 -- Following on the heels of the Federal Reserve's decision yesterday to raise interest rates for the second time in six weeks, announcements from the Commerce and Labor Departments pointed to three signs that the economy may be rebounding from its early summer vacation.
The first came from the Commerce Department, which said that retail sales increased 0.7 percent last month to rebound from a revised 0.5 percent drop in June. A separate report found that retailers increased their inventories by 0.9 percent in June, the biggest such bump in four years.
At the same time, the Labor Department announced that jobless claims reached a five-week low as claims fell by 4,000 to 330,000 over the past week.
"The results are in line with our expectations that growth is going to continue," said Raymond Keating, chief economist for the Small Business Survival Committee, a nonprofit small business advocacy group. "If the naysayers on the economy were right, then the numbers would be flat or even down."
Much of July's retail sales rebound was credited to car dealers who used aggressive buyer incentives to help auto sales jump 2.4 percent in the past month. Demand for furniture, food and electronics also increased to help boost the overall retail sales figure.
The report did receive some mixed reactions though as many economists believed the results were going to be even higher. Respondents to a survey by Dow Jones Newswires and CNBC said they expected a full one percent increase in overall retail sales. Analysts also pointed to last week's labor report that said that the economy was only able to create 32,000 jobs - a number that fell far short of expectations and may indicate that the economic recovery still has a way to go.