The FT says that April sales were also revised sharply upward, boosting optimism. The NYT does a good job of noting that sales were actually down 2.5 percent from May 2007 (the 1 percent number is compared to the month before).

And even as Americans headed to the mall, they faced higher prices when they got there.

“Once one begins to look over the horizon for a catalyst to support consumption, all that remains is a stressed consumer whose purchasing power is rapidly being reduced by the ravages of inflation,” Joseph Brusuelas, an economist at Merk Investments, wrote in a note.

Initial jobless claims rose by 25,000 to a relatively high 384,000 last week and import prices were up a huge 17.8 percent, largely due to oil. The House passed a bill that would extend unemployment benefits, but the White House says it will veto it.

SEC circles troubled AIG division

The Journal on C1 writes that the federal government is investigating an American International Group division that has previously had accounting shenanigans and already been “put on a tight leash” and fined $126 million.

The Securities and Exchange Commission is investigating whether the insurance giant’s division, which put out contracts called credit-default swaps (insurance against a security’s default), intentionally low-balled its losses on swaps.

AIG wouldn’t do anything wrong, now would it?

Hating on speculators

The NYT reports on A1 on the rising din in Washington against speculators, who are being blamed for a little bit of everything recently, including “high gas prices, soaring grocery bills and volatile commodity markets.” The paper notes dryly that “it is common in tough financial times to blame the speculators” but that the calls increasingly have commodity markets worried.

Before it was a Beltway epithet, “speculator” was simply a type of trader in the commodity futures markets. Unlike hedgers — the farmers, miners, refineries and other commercial interests that actually make or use the commodities themselves — the speculators, like day traders in the stock market, are simply trying to profit from changing prices.

Some speculators follow market trends, buying as prices rise and driving them higher. But others buy when they think prices have fallen too low, sell when they see prices as too high or place bets that pay off only when prices fall.

The more money that speculators are willing to put to work in the market, the more liquid it is and the easier it is to buy and sell without causing big ripples in prices.

Yes, conservatives, the Times has the free market’s back.

Microsoft, a fickle suitor

In deal news, Microsoft said it doesn’t want Yahoo anymore even at the price it was willing just one month ago, a move that doesn’t do wonders for its credibility. The WSJ and FT front the news, while the NYT puts it on C1. Yahoo signed a search deal with Google in a bid to boost its prospects and an admission that its search strategy hasn’t worked. The FT and NYT say the alliance will face “intense” antitrust scrutiny, something the Journal’s main story doesn’t get around to somehow, though a C3 post briefly raises the idea.

How long until Microsoft CEO Steve Ballmer, who ought to already be on the outs for its abysmal Vista operating system, sees the door?

The Journal on B1 says Anheuser-Busch, a day after InBev’s $46 billion offer for it, is in “preliminary” talks with Grupo Modelo of Mexico for a link-up. The American beer giant is trying to avoid being bought out by the Belgians, something the paper on B6 says is unlikely without a Modelo deal. The paper in a separate B6 story says if InBev succeeds, it could be bad news for the ad business since the European company doesn’t rely on “carpet-bombing” campaigns like its American competitor.

Are banks low-balling foreclosure rates?

The Washington Post on D1 reports that the comptroller of the currency, a key regulator of big U.S. banks, is questioning the data that banks and mortgage companies are providing on foreclosures.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.