Newspaper article THE JOURNAL RECORD

New Surveys Indicate Confidence Improving

Newspaper article THE JOURNAL RECORD

New Surveys Indicate Confidence Improving

Article excerpt

Consumer confidence, which had remained gloomy even as consumer buying had begun to rise, appears to be moving up again after a long slide.

The University of Michigan index of consumer sentiment, which edged up a bit in February, spurted more than 8 percent in the first half of March to 74.6 from 68.8.

Two other widely followed surveys are giving off small signs of growing optimism but have yet to show a decisive upturn. The weekly ABC/Money Magazine poll, which has been hovering near its recession lows, perked up a bit in the last week.

The Conference Board will not release its March figures until the 31st, but the February responses were more positive late in the month than they had been earlier, said Fabian Linden, executive director of the organization's Consumer Research Center. The index fell sharply in February.

The confidence measures are cheering forecasters, Bush administration officials and marketers who have been watching the readings as anxiously as intensive-care nurses monitoring vital signs.

The downbeat mood earlier this year had seemed to contradict statistical reports and anecdotal evidence of renewed spending.

To economists, improvement in the confidence indexes is critical evidence that the recent jump in retail sales was not a fluke and that the economic recovery is not necessarily doomed to fizzle.

"I look for confirmation of other reports that the economy is improving," said Edward Yardeni, chief economist at C.J. Lawrence. "We economists need all the help we can get."

Edward McKelvey, an economist at Goldman, Sachs, said, "It helps make you comfortable with the idea that there's something real going on."

Goldman now predicts that consumer spending will rise at a nearly 5 percent clip after inflation, which would lift the overall economy.

Economists had worried that consumers' pessimism could turn into a self-fulfilling prophecy. A DRI/McGraw Hill calculation showed that if consumers remained deeply worried, retail sales would be $20 billion lower, and 100,000 fewer cars and 40,000 fewer houses would be sold this year.

This is not the first time that consumers have begun to open their pocketbooks before their spirits brightened. …

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