Con­sumers up­beat about eco­nomic signs

The Washington Times Daily - - Business - BY ANNE D’INNOCENZIO

NEW YORK | Amer­i­cans’ rosy out­look about the U.S. econ­omy re­mains re­silient as they fo­cus on the good in the bar­rage of con­flict­ing eco­nomic news.

A widely watched barom­e­ter of con­sumer con­fi­dence barely budged in March af­ter last month hit­ting its high­est level in a year. Amer­i­cans con­tin­ued to be up­beat in March de­spite mixed eco­nomic signs. The stock mar­ket is up, but so are gas prices. Un­em­ploy­ment is fall­ing, but home prices also are de­clin­ing.

Lynn Franco, di­rec­tor of the Con­fer­ence Board Con­sumer Re­search Cen­ter, a pri­vate re­search group, said con­sumers “feel the econ­omy is not los­ing mo­men­tum,” de­spite the mixed picture of­fered by the of­fi­cial sta­tis­tics.

The Con­fer­ence Board said Tues­day that its closely watched Con­sumer Con­fi­dence In­dex fell slightly to 70.2. That’s down from a re­vised 71.6 in Fe­bru­ary, the high­est level it’s been since the same month in 2011.

Con­sumer con­fi­dence has made a re­cov­ery since it fell to an all-time low of 25.3 in Fe­bru­ary 2009. But the March read­ing is be­low the 90 read­ing that in­di­cates a healthy econ­omy. The in­dex hasn’t been near 90 since De­cem­ber 2007.

Econ­o­mists mon­i­tor con­sumer con­fi­dence closely be­cause Amer­i­cans’ spend­ing on things from cloth­ing to health care ac­counts for about 70 per­cent of the na­tion’s eco­nomic ac­tiv­ity.

One gauge of the Con­sumer Con­fi­dence In­dex, which mea­sures how shop­pers feel now about the econ­omy, rose to 51.0, from 46.4 in the pre­vi­ous month. That mea­sure now stands at the high­est level in more than three years. But the other barom­e­ter, which as­sesses shop­pers’ six-month out­look, de­clined to 83.0 from 88.4 in Fe­bru­ary.

“The mod­er­ate de­cline was due solely to a less fa­vor­able short-term out­look, while con­sumers’ as­sess­ment of cur­rent con­di­tions, on the other hand, con­tin­ued to im­prove,” Mr. Franco said.

The pre­lim­i­nary sur­vey of con­sumers, con­ducted from March 1 through March 15, showed shop­pers’ wor­ries about in­fla­tion rose to the high­est level in a year as gas prices rose. In fact, the na­tion­wide av­er­age for a gal­lon of gas reached $3.90 on Mon­day, which is now less than 10 cents away from last year’s high.

The price typ­i­cally climbs in the weeks ahead of Me­mo­rial Day week­end, the tra­di­tional kick­off of the sum­mer driv­ing sea­son. The na­tional av­er­age peaked last year in early May at an av­er­age of $3.98 per gal­lon. The record high of $4.11 was set in July 2008.

But steady im­prove­ment in other ar­eas of the econ­omy is off­set­ting wor­ries about gas prices. The econ­omy ex­panded at an an­nual rate of 3 per­cent in the final three months of last year. That was bet­ter than the 1.8 per­cent rate in the pre­vi­ous quar­ter. Most econ­o­mists ex­pect growth to slow in the cur­rent quar­ter to be­low 2.5 per­cent, de­spite more hir­ing.

Com­pa­nies also are adding work­ers as the econ­omy picks up. The econ­omy has added an av­er­age of 245,000 jobs per month from De­cem­ber through Fe­bru­ary. The un­em­ploy­ment rate has de­clined to 8.3 per­cent, the low­est in three years.

Sep­a­rately, an in­dex of the hous­ing mar­ket showed that home prices fell in Jan­uary for a fifth straight month in most ma­jor U.S. cities, as mod­est sales in­creases have yet to boost prices. The Stan­dard & Poor’s/case-shiller home­price in­dex re­leased Tues­day showed that prices dropped in Jan­uary from De­cem­ber in 16 of 19 cities tracked.

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