AMERICANS KEEP RETAIL SALES HIGH.

Byline: Rachel Beck Associated Press 

The nation's biggest retailers reported surprisingly strong sales in June as the robust U.S. economy and warm weather sent Americans on a buying bonanza for everything from bathing suits to air conditioners.

The glowing figures on consumer spending were released Thursday as the new treasury secretary said the economy appears strong enough to provide wage earners with even bigger pay increases without reviving inflation.

``I feel good about where the economy is,'' said Treasury Secretary Lawrence Summers on his seventh day on the job.

Most Americans share his view, which has helped boost retail sales to stunning levels all year. May and June have been particularly strong, inspiring many Wall Street analysts to raise their forecasts for second-quarter earnings for retailers.

In addition to the robust economy, consumers are enjoying low inflation, low unemployment levels and a record-setting stock market. Although the Dow Jones industrial average retreated from Wednesday's all-time high, the Nasdaq composite index rose to a second straight record on Thursday.

Summers said consumers' earning power has room to grow even faster.

``If we can keep our fundamentals strong and continue the terrific productivity improvement, I think we have got room to give people wage increases that run ahead of price increases and represent really higher standards of living,'' Summers said on NBC's ``Today.''

Separately, the Labor Department reported Thursday that the number of Americans filing new claims for unemployment benefits fell by 6,000 last week to 294,000, marking the second consecutive drop and the lowest level in more than three months.

``Americans are happy about where the economy is, and that's encouraging many of them to go on a spending spree,'' said Kurt Barnard, president of the newsletter Barnard's Retail Trend Report in Upper Montclair, N.J. ``We saw that in June. Stores across the board did well, and the few that didn't stood out like a sore thumb.''

To finance their spending, many Americans are borrowing money. The Federal Reserve reported Thursday that consumers' outstanding debt, excluding mortgage debt, advanced at a hefty 10.9 percent annual rate in May to a seasonally adjusted $1.34 trillion. It was the largest increase since January.

Among retailers, the big winners last month were the discount chains. Shoppers turned to stores like Wal-Mart, Target and Kmart for their wide selection and affordable prices.

Also faring well were specialty clothing chains, such as the Limited and the Gap, and the department stores, which lured shoppers with capri pants, tank tops and other seasonal fashions.

Consumer electronics retailers, such as Circuit City, reported healthy gains as shoppers flocked to their stores for cheap computers, digital videodisc players, air conditioners and fans.

The late Memorial Day holiday on May 31 helped lift June sales figures. Many retailers began their bookkeeping month May 29 or 30, which meant that much of the buying over the holiday weekend was included in June's sales.

With sales topping estimates in the last few month, retailers haven't needed panic markdowns to move out seasonal products and clear store shelves. Analysts expect that will result in strong second-quarter earnings, which most retailers will report in early August.

While the retail industry did well in June, there were a few chains that struggled. The midprice department stores, such as J.C. Penney, continued to lose business to the discount chains. Stores that specialize in athletic sportswear and footwear, such as Sports Authority, also reported weak sales amid a prolonged downturn in demand for such products.