Durable goods orders dropped 2.4 percent, the largest decline since January, according to the Department of Commerce. Durable goods orders are a leading indicator of manufacturing activity, which can provide measure for overall business health.

In more positive news, U.S. consumer sentiment rose in late September to 73.5 from 65.7 in August, the highest rate since January 2008, according to the Reuters/University of Michigan Surveys of Consumers.

Government data released today showed the number of U.S. workers filing new claims for jobless benefits fell 21,000 last week. In the week ending September 19, initial claims for state unemployment insurance dropped from a revised 551,000 in the previous week to a seasonally adjusted 530,000.

Continued claims of workers still on jobless aid after an initial week of benefits fell by 123,000 to 6.138 million in the week ending Sept. 12. This has beat most analysts expectations, and while one week of positive news certainly does not indicate a trend, it is a start in what is expected to be a long recovery.

The Federal Reserve announced that it will keep its benchmark overnight interest rate, a rate that guides rates on various consumer and business loans, at virtually zero (0-0.25%) for “an extended period.” Analysts believe this rate will carry into 2010.

President Obama also announced this week that unemployment rates will remain high for at least another year. While Fed chairman Ben Bernanke has said that the recession has ended, it is clear that unemployment will be one of the most important factors for a recovery.

Recently released data shows that U.S. industrial production in the month of August was up more than expected. This marked the 2nd month in a row that industrial production rose and many are citing this new data as further evidence that the recession ended around July 2009.

The Commerce Department released data showing that retail sales rose a seasonally adjusted 2.7% last month, after falling 0.2% in July. This news comes as a welcome surprise, especially considering the fact that the gain was broad-based rather than relying on Cash for Clunkers auto sales. Consumer spending, which accounts for over 70% of GDP, will play an integral role in the economic recovery.

The Reuters/University of Michigan preliminary index of consumer sentiment increased to 70.2 this month from 65.7 in August. This unexpected rise is most likely a result of increased confidence due to slowing job cuts and increasingly positive signals from the economy.

The dollar continued it’s recent decline against other major currencies. Gold, traditionally popular during periods of turmoil and uncertainty, rose slightly and recently topped over $1000 USD an ounce. Stocks are trading in choppy markets in anticipation of the Fed’s report on the current business environment, which is to be released at 2PM today.

Recently reported news regarding the earnings outlook provides a window into just how divergent economists’ views are from analysts’ views. Analysts are calling for a 25% increase in profits for the S&P 500 in 2010. That number is 10.9x faster than the expansion in GDP forecasted by economists.  That 10.9x ratio would be the highest on record and would nearly double the 6.1x ratio experienced on average during the past 60 years.

The unemployment rate rose to 9.7% after dipping to 9.4% in July. While rising unemployment is never a good thing the silver lining to this statistic is that the decline in payrolls was the smallest over the past year. Also, economists had been predicting a bigger drop so perhaps the rising unemployment figures are starting to lose some momentum.

The number of people filing for unemployment claims fell last week by 4,000 to 570,000. Economists had been predicting a larger drop, so this reading on the state of unemployment is being perceived as disappointing. Also, sales reports from several major retailers beat expectations but were still not particularly promising.