Shoppers who disappeared from the stores in early summer, are snapping up cars and other big-ticket items while raising hopes the worrisome economic slowdown in the early summer will not last long.

The Commerce Department recently reported that retail sales rebounded by 0.7 percent last month. Consumer demand for autos was strong with the return of attractive incentive offers from auto dealers.

The July increase in retail sales was led by a 2.4 percent jump in auto sales after a 3 percent drop in June. Dealers then renewed offers of financing incentives that lured buyers back to the showrooms.

The strength in July sales and the declines in jobless claims provided evidence the economy was coming out of what Federal Reserve Chairman Alan Greenspan termed as early summer’s "soft patch".

In addition to autos, other areas where sales gained included furniture stores, general merchandise stores, sporting goods stores, and entertainment (e.g. restaurants and bars). Not all areas of the retail sector grew. Sales dropped at gasoline stations and in building supply stores.

Good news on the job market:

The Labor Department reported that the number of laid-off workers filing new claims for unemployment benefits fell by 4,000 last week to 333,000, the smallest total in five weeks.

Economists said both reports should help relieve worries that an early summer slowdown could broaden into a more serious threat to the economic recovery.

The second straight weekly decline in new claims for jobless benefits raised hopes the labor market will continue to show improvements this month after job creation nearly ground to a halt in July.

Rising job gains are seen as critical to supporting future gains in consumer spending.

Fred Harteis