Consumer confidence continues to climb

Don Hogsett, February 4, 2002

In one more compelling signal that American consumers may be ready to re-ignite a sputtering economy with their spending — the engine behind the broad U.S. economy — consumer confidence climbed for a second straight month in January, The Conference Board reported.

The bellwether indicator advanced nearly three points to a reading of 97.3, up from 94.6 in December, and up a whopping 12.4 points from the December reading of 84.9. The index has now climbed back to its pre-Sept. 11 levels, and is at its highest point since last August's reading of 114.3.

"While the economy has not turned around yet, the worst may well be over," said Lynn Franco, director of The Conference Board's Consumer Research Center. "The upturn in confidence is being driven by growing confidence about the business outlook and job prospects. Consumer expectations for the future are now higher than they have been in more than a year."

Critical to any rebound in consumer spending is the jobs picture, and the employment outlook continued to improve in January. Currently, 18.8 percent of consumers expect more jobs to become available during the next six months, up from 16.5 percent in December. In somewhat of a wash, though, the number of consumers who claim jobs are hard to find also rose, to 22.7 percent from 21.9 percent, The Conference Board reported.

And consumers are a little less hopeful of getting a raise any time soon. Only 19 percent said they expect their paychecks to increase, down from 21.5 percent in December.

Polishing up their crystal ball, consumers are more upbeat about economic prospects six months from now. Those expecting an improvement in business conditions rose to 25 percent, up from 22.2 percent in December. And the number who anticipate conditions to worsen fell to 9.6 percent from 11.6 percent the previous month.

Though consumers are clearly feeling better about the future, buying plans remain mixed. After jumping up strongly in December, consumer buying plans for homes and cars backed off a bit in January. But plans to purchase a major appliance increased modestly, to 27.2 percent from 26.9 percent a month ago.

The Conference Board's monthly barometer of consumer sentiment is based on a canvass of 5,000 households nationwide.

Consumer confidence by region

New England -13.2%
Middle Atlantic 2.7
East North Central 3.7
West North Central 20.4
South Atlantic 2.4
East South Central 28.9
West South Central -6.8
Mountain 20.7
Pacific 7.2

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