Good Economic Signs: Retail Sales Rise, CEOs in Hiring Mood

The Minneapolis-based chain also reduced its full-year outlook. Best Buy's shares fell nearly 16% in mid-afternoon trading.

Other retailers got a boost not only from holiday sales but from the weather. A cold November, following two months of unseasonably warm weather, helped boost sales of coats and other winter gear in much of the country.

Consumer spending is closely watched because it accounts for 70% of total economic activity. A drop in retail sales in May and June had raised fears that the economy could be in danger of slipping back into recession.

November's better-than-expected sales figures are prompting many economists to revise their forecasts for consumer spending growth in the October-December quarter. Basile has upgraded his forecast by a full percentage point, to 3.2% from 2.2%, because of the retail data and last week's report that the trade deficit narrowed in October.

One important statistic that remains bleak is the unemployment rate, which rose to 9.8% last month. Many economists caution that the economy won't take a leap forward without more hiring and higher pay.

That may not be too far away, according to a new survey of executives of America's largest companies. It found that 45% plan to hire within six months — the highest percentage for that group in eight years.

The Business Roundtable survey was released a day before President Barack Obama is to meet with a group of corporate executives to discuss job creation and making the U.S. more competitive.

It also comes as Congress is on the verge of passing legislation that would extend the Bush-era tax cuts for two years, lower payroll taxes for workers and extend unemployment benefits through the end of 2011. The one-year cut in Social Security taxes could mean an extra $2,000 in 2011 to someone earning $100,000.

Mark Zandi, chief economist at Moody's Analytics, said the tax cut plan has the potential to lift economic growth to 3.9%, instead of the 2.8% that is in his current forecast.

He also said stronger growth would double the number of jobs the economy creates next year. His current estimate is 1.3 million jobs, which would leave unemployment unchanged at 9.8%. But with growth from the tax cut plan, he anticipates 2.7 million new jobs, which would push the unemployment rate down to 8.7%.

Among other economic reports:

• Wholesale prices rose 0.8 percent in November, mostly because of a jump in energy prices. Core inflation, which excludes volatile energy and food prices, ticked up only 0.3 percent. A report on consumer prices is scheduled to be released Wednesday.
• Businesses are continuing to replenish their stockpiles — a trend that helped lift the country out of the recession. Inventories rose 0.7 percent in October. It was the 10th straight monthly gain. And sales by manufacturers, wholesalers and retailers rose 1.4 percent in October, the best showing in seven months. Stronger rebuilding of stockpiles and sales suggest factories will see rising orders in coming months.