Retail, credit, and jobless claims data released Thursday, July 8, suggested that the U.S. economy continues its upward climb but that consumers have a long way to go before they can regain the ground they lost when the recession hit.

Retail chain-store sales were mixed, with half of stores matching analysts’ expectations and the other half falling behind. Data reported by the Federal Reserve showed that consumer credit decreased at an annual rate of 4.5% in May, with revolving credit 10.5% lower. Initial jobless claims declined by 21,000 to 454,000 in the week ended July 3, compared to economists’ expectations for a 12,000 drop in claims.

Stocks rose on the news, with the Dow Jones industrial average rising 120.71 points, or 1.20%, to close at 10,138.99.

“Consumers are willing to spend when the merchandise is right, but they’re still feeling the economic pinch especially in respect to the jobless numbers. That really impacts my sector,” said Chandi Neubauer, a soft-line retail analyst for New York-based Majestic Research. “The winners are still winning and the losers are still losing. It has really bifurcated the market. People are willing to spend $200 on a jean that they like, and then there are other retailers that can’t get rid of a jean for $4.99.”

The stock market’s uneven performance in the last two months also contributes to consumer uncertainty. The value of retirement funds has eroded since the Dow’s April peak, 13% above where it now stands, just as the effects of the federal government’s stimulus plan are wearing off and hurting home sales.

Though the jobless claims numbers were positive, they don’t yet show strong evidence that companies are hiring again.

“This is welcome news and we’d love to be able to say with confidence that it marks the start of a renewed downward trend, but we cannot,” said Ian Shepherdson, chief U.S. economist for High Frequency Economics Ltd., in Valhalla, New York, in an analyst note. “Even at the best of times single weekly claims numbers cannot be taken very seriously, but right now the data are likely distorted.”

Further evidence of the instability of retail sales this week came from the Johnson Redbook Retail Sales Index, released Wednesday, June 7, which showed a 0.5% drop compared to May, although the index was 3.1% higher than it was a year ago.

The same-store sales numbers that came out Thursday indicate that consumers are willing to spend money only when the merchandise is right, Neubauer said.

“They’re significantly more particular than they have been in years past when the economy was really robust,” she said. “People would just spend money willy-nilly, and back then all the retailers were winning. But now that the economy is suffering still, the real winners are coming through. The losers are looking worse and the winners are looking stronger.”

One of those winners is Aeropostale. A teen retailer, Aeropostale offers “terrific merchandise at the right price,” Neubauer said. “Aeropostale continues to post positive comps, and their merchandise margins continue to rise, which isn’t something we’ve been hearing from many retailers. Generally, they’ve been contracting due to promotions.”

This year, more retailers are discounting merchandise heavily to pull cautious customers into their stores. The strategy isn’t working well, however, and analysts are predicting weak back-to-school sales in late summer and early fall, especially with the teenage employment rate at its currently low levels.

While the Labor Department’s Thursday report put jobless claims at their lowest levels since early May, high unemployment in the first half of 2010 has dragged down consumer confidence, which in turn slowed spending.

“I’ve found lately that the jobless numbers have been a very strong correlation with our space,” Neubauer said. “When people are losing jobs–or more importantly, when people know people who are losing jobs–people don’t spend money, and so it tends to hurt the retail sector disproportionately. The names I cover are disposable income. A lot of them suffer because the teen employment rate has been so bad. While teens do get a lot of money from their parents, the fact that teen unemployment is so high definitely weighs on the sector.”

Read a story about consumer spending in spring from the archives of InvestmentAdvisor.com.