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Acronicta americana
The young caterpillar is densely covered with yellow setae. The older caterpillar's setae are either pale yellow or white. All instars have thin, black setae on the first and third abdominal segments. On the eighth abdominal segment, there is one tuft of black setae. The caterpillar will reach a length 50 mm (2 inches). - from Wikipedia
Caution should be taken in handling the caterpillar, as the hollow setae may break off in to human skin, releasing a toxin which can produce a rash - from Wikipedia
Thank you so much for your help ForestDragon! This caterpillar was quite interesting to watch and I am glad that I did not touch it (please see the note from Wikipedia) ...