President Barack Obama and the Federal Reserve's chairman, Ben Bernanke, both yesterday declared that they saw signs of progress towards economic recovery in the US – but the latest retail sales data refused to cooperate with their coordinated confidence boost.
Stock markets went into reverse when it was revealed that consumer spending was sharply lower in March after two months of improvement. Forecasters had predicted another positive reading, but in fact sales were down 1.1 per cent from February.
The disappointment came as a particular blow to proponents of an early end to the recession, because the US consumer accounts for two-thirds of US GDP.
In a major speech defending his economic policies, the President warned that the recession would continue to bring "more job loss, more foreclosures, more pain before it ends", but his core message was upbeat. "The Recovery Act, the bank capitalisation programme, the housing plan, the strengthening of the non-bank credit market, the auto plan and our work at the G20 have been necessary pieces of the recovery puzzle," he said in a speech to Georgetown University, and they are "starting to generate signs of economic progress".
Mr Bernanke, speaking at Morehouse College in Atlanta, said: "Recently we have seen tentative signs that the sharp decline in economic activity may be slowing. A levelling out of economic activity is the first step toward recovery."
Economists have seen many signs of stabilisation in recent data, but struggled to put a brave face on the slippage in retail sales. There were sharp declines in sales of cars, clothing and electronics.
John Lonski, the chief economist at Moody's Investors Service, said: "Retail sales broke sharply from the ranks of what had been a parade of good economic news. I think this serves as a reminder that the recession is still here and that rising unemployment, declining income as well as a deep plunge by household net worth will adversely affect retail sales indefinitely."