After months of nearly unmitigated gloom, glimmers of improvement are emerging in the U.S. economy.
On Thursday, retail sales figures showed that the decline in consumer spending that began with a miserable Christmas shopping season might be stabilizing. Wells Fargo & Co. surprised analysts by saying it expected to report a record first-quarter profit despite setting aside $4.6 billion for potential loan losses.
Wall Street celebrated by sending bank stocks soaring, and the Dow Jones index rising nearly 250 points.
What's more, a report from the Commerce Department said the U.S. trade deficit declined unexpectedly in February as exports rose. It's more evidence, some experts said, that the economy's troubles may be easing.
Many analysts still expect job losses to continue through the end of the year and the U.S. unemployment rate -- which reached 8.5% last month -- to hit double digits before declining in 2010.
But while unemployment may continue rising, President Obama's top economic advisor, Lawrence H. Summers, said there was no longer "that sense of a free fall" in the economy.
"There has been a substantial anecdotal flow over the last six to eight weeks of things that felt a little bit better," said Summers, director of Obama's National Economic Council.
As if to cap things off, San Francisco's Wells Fargo, the biggest bank from a state that has become a national emblem for foreclosures and job losses, stunned Wall Street by predicting its earnings would be more than twice what analysts had forecast -- a record $3 billion in first-quarter profit.
Clearly benefiting from the low interest rates engineered by the government, Wells reported that its mortgage business was booming, with encouraging news about loans to buy houses as well as a tsunami of refinancings. It also said its takeover of Wachovia Corp., the Eastern banking giant that nearly collapsed last year after heavy mortgage losses and a run on deposits, was working out better than expected.
A report that all 19 of the nation's largest banks were likely to pass the government's so-called stress tests for financial health also buoyed confidence. The stock market reacted as if the news marked a turning point for the battered banking industry, and perhaps the larger economy.
An index of bank stocks was up 20% for the day. Wells shares, which fell briefly below $8 just over a month ago, jumped 32% to $19.61.
