Nation’s rebound continues

Hope Yen

Tuesday, March 26, 2002 | 9:49 a.m.

NEW YORK -- Consumer confidence surged in March to its highest level in seven months, bolstered by growing optimism about the economy and the job market.

The New York-based Conference Board said today that its Consumer Confidence Index rose to 110.2 this month from a revised 95.0 in February. Analysts were expecting a reading of 98.

The index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity.

"The latest gains are striking," said Lynn Franco, director of the Conference Board's research center. "This new boom in confidence should translate into increased consumer spending and stronger economic growth ahead."

The number of consumers who rated the present economic outlook as good had the sharpest gain in 25 years, while those with upbeat expectations for the next six months had the largest increase in nearly a decade, Franco said.

The index compares results to its base year, 1985, when it stood at 100. The March figure puts consumer confidence at the highest since August, when the reading stood at 114 prior to the Sept. 11 attacks. It also indicates building optimism after concerns about jobs and accounting scandals unexpectedly pulled down confidence last month.

Separately, the Commerce Department reported that orders to U.S. factories for big-ticket goods rose 1.5 percent in February, the third straight monthly increase, offering additional evidence that the economy is on the mend.

On Wall Street, key stock indexes were higher on the news. The Dow Jones average rose 128 points to 10,410 and the Nasdaq composite index rose 26 points to 1,838.

After slashing short-term interest rates 11 times last year to prop up a recessionary economy, the Federal Reserve decided to leave rates unchanged last week, just as it did in January. Economists believe the Fed's stance as preparing Americans for the possibility of higher rates this year.

In its report, the Conference Board said consumers' assessment of current business conditions improved significantly. Those rating conditions as good increased to 20.7 percent from 17.6 percent in February. Consumers who felt business conditions were bad dropped to 18.1 percent from 22.8 percent.

Consumers reporting that jobs currently were plentiful rose to 20.6 percent from 18.2 percent, while those claiming jobs were hard to get fell to 20.8 percent from 22.6 percent.

Regarding prospects for the next six months, consumers were similarly upbeat. Those expecting an improvement in business conditions increased to 25 percent from 22.3 percent, while consumers expecting conditions to worsen declined to 6.3 percent from 11.1 percent.

As to their job outlook, some 20.6 percent of all consumers expect more jobs to become available over the next six months, up from 18.3 percent last month. Those expecting fewer jobs fell to 13.6 percent from 19.5 percent.

About 22 percent of consumers expect their incomes to increase, up from 20.5 percent in February, the board reported.