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By The Associated Press
President Obama is proclaiming signs of economic progress but warning Americans that "by no means are we out of the woods." His remarks in a speech at Georgetown University come on the same day the government said retail sales fell unexpectedly and businesses slashed inventories as the recession continued to take its toll.
In excerpts released in advance of his speech, the president juggles a glass-half-full take on the economy with a determination to not be seen as naive about how well things are going. He said that a full recovery is some time off, and that it depends on two things: building a new foundation for the U.S. economy and making changes in the political landscape.
"There is no doubt that times are still tough," Obama will say, according to excerpts of his speech released in advance by the White House. "But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America's future that is far different than our troubled economic past."
Retail Sales Drop
The Commerce Department said Tuesday that retail sales dipped 1.1 percent in March. It was the biggest decline in three months and a much weaker showing than the 0.3 percent increase that analysts expected.
A big drop in auto sales led the overall slump in demand. Sales also plunged at clothing stores, appliance outlets and furniture stores.
Meanwhile, the Labor Department said wholesale prices plunged 1.2 percent in March as the cost of gasoline, other energy products and food fell sharply.
Gas prices fell 13.1 percent, the steepest drop since December, while food costs dipped 0.7 percent. Excluding volatile food and energy prices, the producer price index was unchanged, below analysts' forecasts of a 0.1 percent rise.
Also Tuesday, the Commerce Department said businesses slashed their inventories for a sixth straight month in February as they tried to cope with a steep recession. Business inventories dropped 1.3 percent in February, matching the January decline and close to the 1.2 percent fall that economists had expected.
Bernanke: 'Tentative Signs' Recession May Be Easing
Federal Reserve Chairman Ben Bernanke said Tuesday there have been "tentative signs" that the recession may be easing. But he also warned that any hope for a lasting recovery hinges on the government's success in stabilizing shaky financial markets and getting credit to flow more freely again.
"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing," Bernanke said. "A leveling out of economic activity is the first step toward recovery. To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets."
In remarks prepared for students and faculty at Morehouse College in Atlanta, Bernanke mentioned improvements in recent data on home and auto sales, home building and consumer spending as flickering signs of encouragement. But his speech was prepared before the retail sales and other data were released.
Seasonal adjustments could partly explain the unexpectedly weak showing for retail sales. The March 2008 performance had been boosted by an early Easter, while the holiday did not occur this year until April, delaying some shopping.
The 1.1 percent drop in retail sales last month followed a revised 0.3 percent increase in February, originally reported as a 0.1 percent decrease. Retail sales rose 1.9 percent in January, which followed six straight months of declines.
Retail Weakness Widespread
For March, auto sales fell 2.3 percent, following a 3 percent drop in February. Auto sales in March were 23.5 percent below year-ago levels as automakers struggle through their deepest downturn in decades.
Excluding autos, retail sales fell 0.9 percent after a 1 percent rise in February. That also was worse than analysts' forecasts of a flat reading for last month.
Sales at appliance stores fell 5.9 percent last month and furniture stores reported a 1.7 percent decline. Sales at specialty clothing stores fell 1.8 percent and dipped 0.2 percent at general merchandise stores, a category that includes Wal-Mart Stores Inc., Target Corp. and Macy's.
Sales at gasoline stations fell 1.6 percent, while food and beverage stores saw one of the few increases for the month, a rise of 0.5 percent.
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