One-month surge highest since 1991

Don Hogsett, Staff Staff, May 5, 2003

The speedy resolution of the war in Iraq clearly cheered Americans and drove consumer confidence levels surging during March by the biggest one-month gain since the end of the Persian Gulf War in 1991.

Reversing months of steady and steep declines, the bellwether Consumer Confidence Index compiled by The Conference Board jumped up by 31.9 percent to a level of 81.0, the highest since November.

Strikingly, noted Lynn Franco, director of the business think tank's Consumer Research Center, consumers now feel better about both current and future conditions, especially the job market. And that, she said, could trigger a rebound in consumer spending.

Specifically, she said, "the increase in the Present Situation Index, especially in labor market conditions, may very will signal a turnaround in confidence and a more favorable outlook for consumer spending."

Gauging current conditions, consumers were markedly less negative than in March, as those rating current business conditions "bad" declined to 23.7 percent from 30.0 percent the prior month. Perceptions of the labor market, a key indicator for consumer spending, improved substantially. The number of consumers who said jobs are hard to get declined to 29.5 percent from 23.0 percent. The number who expect more jobs to become available jumped to 16.7 percent from 10.8 percent.

Consumers also felt better about their paychecks, and the number who said they expect an increase in income rose to 17.1 percent form 15.8 percent.

The short-term business outlook improved considerably, and the number of consumers who expect business conditions to improve over the next six months jumped up to 18.7 percent from 13.0 percent. The number who expect conditions to worsen fell to 12.3 percent from 20.0 percent.

Consumer confidence by region

Region % change
New England +16.7
Middle Atlantic +25.2
East North Central +24.8
West North Central +9.5
South Atlantic +32.3
East South Central +34.0
West South Central +51.4
Mountain +59.3
Pacific +18.6

Consumer Buying Plans — April
plans to purchase over the next six months

Source: The Conference Board
Homes +3.1%
Carpets -8.2
Cars -10.6
Major Appliances +1.1
Vacation -1.2

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