- The Washington Times - Friday, June 12, 2009

Retail sales rose in May for the first time in three months, but much of the small increase came from filling stations selling gasoline at much higher prices.

Separately, initial jobless claims declined by 24,000 to 601,000 for the week ending June 6. It was the lowest level since January, and jobless claims have now fallen by more than 40,000 over the past four weeks, the Labor Department reported Thursday.

However, new jobless claims still remain highly elevated, indicating that economic conditions across the country continue to remain weak or to deteriorate, as the Federal Reserve reported Wednesday in its Beige Book.

Continuing jobless claims, which are collected by workers for more than one week, increased by 59,000 and reached a record high of 6.82 million for the week ending May 30. It was the 19th consecutive record. Last week’s much-touted report of a 15,000 decline in continuing claims was revised to show a small increase.

Retail sales rose by 0.5 percent in May after declining by 0.2 percent in April and 1.2 percent in March, the Commerce Department reported Thursday.

Sales of motor vehicles and parts jumped 0.5 percent as consumers converged on auto dealers seeking big bargains on unwanted inventories.

Most of May’s retail sales gain was led by “a huge spike in gasoline prices and a rogue increase in auto sales driven by huge factory and auto dealer discounts,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight. “Overall, the state of retail sales remains weak.”

The Federal Reserve reported Thursday that household net worth declined $1.3 trillion during the first quarter as home values and stock prices continued to decline. Household net worth plunged nearly $5 trillion during the fourth quarter.

Since mid-2007, household net worth has plummeted by $14 trillion, or 21.7 percent. Such a decline is unprecedented since the Federal Reserve began compiling the data in 1952. Household net worth now stands at $50.4 trillion, less than its value during the fourth quarter of 2004.

Real estate assets held by households declined by $551 billion in the January-March period. Household net worth derived from corporate equities fell nearly $350 billion during the first quarter, but the stock market has rebounded since it hit a 12-year low on March 9.

“The share of household real estate equity that was owned by householders plunged again during the first quarter to another record low of just 41.4 percent,” said Charles McMillion, chief economist of MBG Information Services. During the severe recession of 1981-82, Mr. McMillion noted, “homeowners owned over 70 percent of the equity in their homes.”

The stock market reacted mildly to Thursday’s developments.

The broad-based Standard & Poor’s 500 Index closed at its highest level for the year. The S&P; gained 5.74 points, 0.6 percent, to close at 944.89. The Dow Jones Industrial Average increased 31.9 points, 0.4 percent, to end the day at 8770.92, marginally below its 2009 high. The technology-heavy Nasdaq Composite Index jumped 9.29 points, 0.5 percent, to close at 1862.37.

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