Wall Street investors cheering the rebound they have been look searching for off and on since last November.

Wall Street was up by 3.5% to 4% overnight, to take overall gains sinceTuesday to 11%. The drivers, a small than expected fall in retail sales, which actually rose after car and petrol sales were stripped out; General Electric lost its Triple A credit rating, but only to AA-plus on the Standard & Poor’s scale: the market had been expecting a deeper cut; GE shares jumped 13%.

Bank of America CEO Kern Lewis said his bank was profitable in January and February, like Citigroup and JPMorgan Chase. But like his competitors that’s before taxes and asset valuations, which will be done at the end of this month. B of A shares rose 15%, other bank shares rose solidly, helping push the overall market higher.

There was a fourth takeover in healthcare (‘Only $US1.7 billion’), while Roche of Switzerland upped its price to win Genetech in a $US47 billion deal for the 44% Roche didn’t already own. That takes the value of deals done so far this year to around $US150 billion. And who’s lending the cash component? Big American banks….and there haven’t been too many quibbles in Washington, which makes you wonder why.

Retail sales fell by just 0.1% in February, after rising by an upwardly revised 1.8%.

The US Commerce Department said that excluding car sales, sales rose 0.7%, compared to a 1.6% rise the previous month.

What made investors happy was the composition of the figures: sales rose across retail categories, including a 2.8% increase for clothing purchases, a 0.7% increase in furniture sales and a 1.1% rise in department stores purchases, which had been depressed since late last year.

But as usual there were a number of now ‘normal’ reminders of the recession and its debilitating impact on the US economy. The number of people making their first claims for unemployment insurance rose last week, and the number of people collecting these benefits across the us hit an all time record 5.3 million.

The details, in a government report released Thursday, will bring markets back to the ground from their present bounce once investors realise how tough times are in the wider US economy.

The 5,317,000 people receiving unemployment insurance in the week ended February 28 was up 193,000 from the previous week and was the highest figure since records started back in 1967 and the sixth record figure in a row.

In the week to February 26, 654,000 people made their first jobless claims, up from a revised 645,000 the previous week.

In a separate report, the Commerce Department said business inventories fell 1.1% in January and sales dropped 1.0%: both signs the US retail, manufacturing and wholesaling sectors are not getting enough orders to boost production and stocks of goods to be sold.

Housing foreclosures are again rising as cooling off periods in a couple of states end and the merry-go-round starts spinning faster.

For all the talk of a market rebound, there was one set of figures released overnight which illustrates the extent of the damage to the US and global economy, and help explain why any recovery is going to be a long time in happening and won’t be without more pain.

Meanwhile German industrial production fell by a record amount in January; the slump in Japanese 4th quarter growth confirmed at a near record 12.1%; Chinese industrial production weaker than last year in January and February: its no wonder the World Bank and IMF were saying this week that they saw world economic growth being negative this year.

World Bank head Robert Zoellick went further in a London newspaper interview overnight, saying that global output output is likely to shrink by 1% to 2% this year.

“My guess is that growth will probably fall about 1 to 2 percent.

“We haven’t seen numbers like that since World War Two, which really means the Thirties. So these are serious and dangerous times.”

The bank issued its warning on Tuesday, which took many by surprise. A day later, the head of the International Monetary Fund, Dominique Strauss-Kahn, warned that the globe would be gripped by a “Great Recession” and that the IMF’s earlier forecasts for economic growth of 0.5% (which amounts to a static year) were too optimistic.

And overnight the European Central bank warned in its latest bulletin that world trade and global economic activity will be subdued for sometime to come.

In China industrial output rose 3.8% in the first two months of this year, much slower than the the same period of 2008 which had growth of 15.4% year on year for the two month period.

February output was up 11% this year (January wasn’t given because of the Lunar New Year), but this year was not compared with the same month of 2008 when the Lunar New Year fell and the month had five fewer working days.

Chinese retail sales were slower, but bank lending was strong for a second month in a row in February.

The statistics bureau said retail sales rose 15.2% in January and February combined from a year earlier. That’s down sharply from the 19% lift in December and less from November’s 17% rise.

The figures came one day after customs authorities reported a drop in February exports of more than 25%.

The Japanese economy didn’t contract by an annual rate of 12.7% in the December quarter as originally estimated: final figures out yesterday show it was a 12.1% contraction. A small improvement, but one not connected to anything but the statistics which showed a larger rise in inventories in the quarter than previously reported.

Overall, the Japanese economy shrank 3.2% from the previous quarter, or an annualized 12.1% fall. In contrast the 15 nation euro zone economy shrank 1.5% in the same period, but Germany was down over 2% and is still contracting. The United States contracted an annualized 6.2%, or 1.6% from quarter to quarter. Australia contracted at 0.5% in the 4th quarter on the September quarter, but we still had positive growth over the year.