Retail Sales Rise Unexpectedly; Wholesale Prices Soar

American retail sales unexpectedly surged in November, suggesting the economy isn't starting to slump, while wholesale inflation soared at a 34-year high.

Retail sales increased 1.2% in November after rising 0.2% in October, the Commerce Department said yesterday. Wall Street expected a gain of 0.6%.

A separate government report showed American wholesale prices soared last month at their fastest pace since the Nixon administration, rising 3.2% on a push from energy prices.

Gasoline was behind a big increase in the sales of American retailers; the rising price at the pump lifted gasoline station receipts and, in turn, drove overall retail sales higher. Still, even without gasoline stations, all other retail sales rose a healthy 0.6%.

"These are pretty darn good numbers," the chairman of Johnson Illington Advisors, Hugh Johnson, said. "If you're going to worry about anything, worry they're too strong. It's unlikely a recession has started. Consumer spending remains robust."

The retail sales report illustrates where Americans are spending their money. Consumer spending makes up about 70% of the nation's gross domestic product, which is the scoreboard for the economy.