Consumer confidence exceeds target

Wednesday, March 27, 2002

Randy Allen LeGrand, 27, of Jackson, Mo., was taken into custody outside the Spradling and Spradling law office at 1838 Broadway on Tuesday morning.By Hope Yen ~ The Associated Press

NEW YORK -- Consumer confidence soared in March to its highest level since Sept. 11, and orders to U.S. factories for big-ticket goods rose for the third straight month, offering more evidence that the economy is rebounding from recession.

The Conference Board said Tuesday that its Consumer Confidence Index rose from 95.0 in February to 110.2 this month -- much higher than the 98 analysts were expecting. The reading is the highest since August, when it stood at 114.

Separately, the Commerce Department said orders for costly manufactured goods grew 1.5 percent in February. Much of the strength came from a big jump in orders for airplanes and aircraft parts.

'Promised land'

"With consumer confidence soaring, the consumer will lead us to the promised land," said Joel Naroff of Naroff Economic Advisors.

John Silvia, Wachovia Securities' chief economist, said: "It will be a very good spring for retailers."

Treasury Secretary Paul O'Neill said he believes the economy will gain strength the rest of the year.

"Consumers will grow more positive as job-growth accelerates and the war on terrorism progresses," O'Neill said in a speech to the National Association for Business Economics.

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

Last month, concerns about jobs and accounting scandals unexpectedly pulled down the confidence index.

But since then, the number of consumers who rated the economic outlook as good had the largest increase in 25 years, said Lynn Franco, director of the Conference Board's research center. And the number of those with upbeat expectations for the next six months had the sharpest gain in nearly a decade.

Economists credited the surge to the brightening jobs outlook. Earlier this month, the Labor Department said February's unemployment rate dropped to 5.5 percent after businesses added 66,000 jobs.

"Nothing inspires confidence like having a job or knowing you can get one," said Oscar Gonzalez, an economist with John Hancock.

The manufacturing report also provided evidence that the battered sector is recovering. But most of the strength came from a 41 percent jump in orders for airplanes and aircraft parts; orders for new cars and trucks actually fell 5.9 percent.

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