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		Home Page We're about Mortgage News You Can Use   Consumer Confidence Index in U.S. Jumps to 96.8, Highest Since July 2002 Jan. 27 (Bloomberg) -- U.S. consumers' confidence in the economy rose this month to the highest since July 2002 as Americans grew more optimistic about their prospects later this year, a private research group reported. The Conference Board's index of consumer confidence rose to 96.8 this month from a revised 91.7 in December. The percentage of people who saw better business conditions and more hiring six months from now rose, the New York research group said. The increase in optimism is showing through in greater demand at companies including Royal Caribbean Cruises Ltd. and Coach Inc. The economy may expand 4.6 percent this year, the fastest since 1984, according to the latest survey of economists by Blue Chip Economic Indicators. ``Consumers are shopping more often and we see the optimism,'' said Lew Frankfort, chief executive officer at Coach, in a televised interview with Bloomberg News. Frankfort said the New York-based seller of luxury leather goods plans to open about 20 stores in the next year to meet demand. Assessments of current economic conditions weren't as strong because the economy is having trouble creating jobs. Federal Reserve policy makers, meeting today and tomorrow, will probably keep their benchmark interest rate at the lowest since 1958 until job growth improves, a survey of economists showed. ``People are more optimistic but the consumer is still worried about their job situation,'' said Delos Smith, a Conference Board economist. ``Jobs, jobs, jobs is everybody's concern.'' Labor Concerns Economists had forecast a jump in the sentiment index to 98.5 in January from 91.3 last month, based on the median of 58 forecasts in a Bloomberg News survey. The last time the index was this high was in July 2002, when it was 97.4. The Treasury's benchmark 10-year note rose 3/8 point, pushing down the yield 4 basis points to 4.09 percent at 11:25 a.m. New York time. The index measuring sentiment about the current economy rose to 80 from 74.3 in December, restrained by labor market worries, the Conference Board said. The number of people who saw jobs currently easy to get fell to 0.2 percentage points to 12.4 percent, and the number who said jobs weren't plentiful now rose to 56.2 percent from 55 percent. The expectations index rose to 108.1, the highest since May 2002, from 103.3 and boosted the overall index. The rise in expectations is ``consistent, if maintained, with real consumers' spending rising at a year-over-year pace of about 5 percent,'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. More Optimism Twenty-two percent said business conditions are good, up from 18.6 percent in December, while the share who saw business conditions as bad fell to 22.8 percent from 24.5 percent. ``There's a general sense that consumer demand is growing,'' said Christie Hefner, chief executive of Playboy Enterprises Inc., in a television interview Friday. Ad sales at Playboy, the most widely read men's magazine, are up at the start of 2004, Hefner said. ``My sense is more optimism than I have seen since Sept. 11.'' The gauge of people who said jobs would become easier to find by July rose to 22.2 in January from 21.6, and the percentage who said jobs would be harder to find fell to 14.9 from 16.9. The percentage expecting their incomes to decline fell to 8.8 from 10.2, the Conference Board found. The four-week average of initial jobless claims fell last week to 344,500, the lowest in almost three years, suggesting companies are retaining more workers. At the same time, the economy created 278,000 jobs in the past five months, fewer than expected. The U.S. added 1,000 jobs in December, just a fraction of the 150,000 median forecast, the Labor Department said Jan. 9. `Holding Their Breath' ``We do expect jobs to gain some momentum as we approach the middle of this year,'' said Geoffrey Somes, a senior economist at Fleet Bank in Boston. For consumer spending, the risk lies in the case that ``the jobs people are holding their breath for never materialize, '' he said. The Conference Board bases its consumer confidence gauge on a survey of 5,000 households. The latest survey was taken from Jan. 1-21. The University of Michigan's preliminary consumer sentiment index reported Jan. 16 jumped to 103.2, the highest since 107.6 in November 2000. The preliminary reading was based on a survey of about 250 households. The final index, reflecting 500 households, may be 103 when reported next Friday, based on the median of 43 estimates in a Bloomberg News survey of economists. ``Our survey is lower because we specifically ask about jobs,'' Smith said. ``Ours is a middling report because of the jobs situation.'' Cruises That explains why Fed policy makers will say tomorrow that they are keeping the benchmark overnight bank lending rate at 1 percent and will leave rates low for a ``considerable period,'' according to all 85 economists surveyed by Bloomberg News. Fed studies have shown that confidence indicators don't always predict changes in spending patterns. Consumer confidence tends to track the labor market, while spending, which accounts for 70 percent of the economy, is tied more to a person's view of his future wealth. ``We're looking forward to a much better year in 2004,'' said Richard Fain, chief executive of Royal Caribbean, in a television interview. ``We certainly, along with everyone else, feel the economy is much stronger.'' Royal Caribbean, the world's No. 2 cruise-line operator behind Carnival Corp., has reported increased passenger bookings for cruises ``every quarter,'' Fain said. Spending plans fell in all major categories in January, although the Conference Board's Smith characterized the declines as ``trivial.'' The number of survey respondents who said they would buy a car over the next six months fell to 6.3 percent from 6.4 percent in November. Some 3.1 percent expect to buy a new home, compared with 3.2 percent last month, the Conference Board said. The number of people who said they expected to buy a new appliance fell to 27.9 percent from 28.9 the month before. ``Essentially buying plans are unchanged,'' Smith said. ``The consumer is hanging in there, expecting better times.'' Last Updated: January 27, 2004 11:31 EST   Back to Original Article: Mortgage News You Can Use   Continue with: Gold Coins MBA Releases Long-Term Forecast for U.S. Economy and Housing Finance Market CBO Says '04 Deficit Will Rise to $477 Billion The Jobless Recovery A Cheap Dollar Boom Consumer Confidence Rises in January
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