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Higher January retail sales suggest stronger economic growth

WASHINGTON - A modestly better-than-expected report on retail sales for last month could suggest stronger economic growth in coming months. But this week's severe snowstorms will likely depress activity this month.

The 0.5 percent gain the Commerce Department reported Friday exceeded the 0.3 percent rise economists had expected. Strength came from a surge at general merchandise stores. These include big chains such as those owned by Wal-Mart Stores Inc. Excluding autos, sales rose 0.6 percent.

Higher consumer spending is vital because it accounts for about 70 percent of economic activity. Economists caution, though, that the spending increases seen since summer could falter as the jobs crisis weighs on a fledgling recovery.

They noted a second report that showed consumer confidence slipped in early February. The Reuters/University of Michigan consumer sentiment index dipped to 73.7 for early February. That was down from 74.4 in January.

Some analysts said the unsettled global economy is eroding confidence that the United States can sustain a recovery from the worst recession in decades. But economists said the biggest threat to the U.S. economy remains the reluctance of U.S. consumers to keep spending.

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