And the beat goes on...
U.S. Consumer Confidence Surges More Than Expected on Optimism Over Jobs
U.S. Consumer Confidence Rises to Seven-Month High
from Bloomberg
By Siobhan Hughes
Washington, March 26 (Bloomberg) -- U.S. consumer confidence surged in March, one year after the recession began, increasing the likelihood that shoppers will keep fueling recovery.
``It clearly suggests that consumers now believe the recession is over, and that's an important milestone,'' said Mark Vitner, an economist at Wachovia Securities in Charlotte.
The Conference Board's gauge of sentiment rose to 110.2 for the month from 95 in February, as more workers felt optimistic about finding jobs. This month's index was the highest since August, and the increase the largest since employment rebounded from the last recession. The assessment of present and future conditions also jumped.
Spending typically rises with optimism, and consumer outlays supply two-thirds of gross domestic product. Wal-Mart Stores Inc., the world's largest retailer, is forecasting a sales increase of as much as 10 percent this month. Foot Locker Inc. is adding stores and some more expensive shoe brands.
Manufacturing still may be slow to take part in the recovery, which is one reason Federal Reserve policy makers may be cautious in raising interest rates this year. Orders for durable goods apart from aircraft and other transportation equipment fell 1.3 percent last month after a 0.2 percent increase in January, the Commerce Department reported. Orders including transportation equipment rose 1.5 percent.
No Hurry on Rates
``Sooner or later, as the economy gathers momentum and gets stronger, an adjustment will have to be made, but I'm in no hurry,'' Robert McTeer, president of the Fed Bank of Dallas and a voting member of the Federal Open Market Committee, said in an interview at a European Banking and Financial Forum in Prague.
Analysts had expected a confidence reading of 98, based on the median of 51 forecasts in a Bloomberg News survey. The August 2001 reading was 114. The New York-based research group conducted its survey of 5,000 households March 1-18.
Treasury securities and stocks rose after the reports, the comments by McTeer and one from Fed Bank of New York President William McDonough that inflation remains tame while ``slack'' is still in the economy. Stock investors have expressed concern that too rapid an increase in interest rates would stifle profits.
The 4 7/8 percent Treasury note maturing in 2012 rose more than 1/3 point, pushing its yield down 4 basis points to 5.36 percent. The Dow Jones Industrial Average gained 120 points, or 1.2 percent. The Nasdaq Composite Index rose 21 points, or 1.2 percent.
Rate Worries
After 11 cuts last year in the target rate for overnight loans between banks, central bankers declared last week that the economy no longer is threatened by weak growth. That opened the way to speculation the Fed will start raising rates by midyear.
Optimism about present and future conditions surged.
The index of present conditions rose to 111.5, the highest since September and the biggest jump in 25 years, from 96.4 in February. The gauge of consumer expectations for the next six months rose to 109.3, the highest since September 2000 and the largest increase in almost a decade, from 94.
Foot Locker is among retailers opening new stores as consumer appetites show signs of growing.
The biggest U.S. retailer of athletic shoes and clothing plans to open stores in Times Square and Harlem in New York City. It also plans to offer more private-label clothing, which sells at a higher profit, and shoes that cost more than $100, such as Nike Inc.'s Air Jordan sneakers, at its other stores.
Labor Market
An improvement in the labor market is supporting confidence. The percentage of consumers who saw jobs as plentiful rose to 20.6 percent in March from 18.2 percent in February. The share seeing jobs as not so plentiful fell to 58.6 percent from 59.2 percent.
The percentage of respondents who saw jobs as hard to get fell to 20.8 in March from 22.6 in February. According to Labor Department records, jobless claims have stayed below 400,000 all year, the longest stretch since a recession started in March of last year. The unemployment rate dropped to 5.5 percent in February, and payrolls rose for the first time in seven months.
Companies nonetheless are still shedding workers, and the jobless rate still may rise. Ford Motor Co., the world's second- largest automaker, plans to eliminate 1,500 salaried jobs by July, part of a plan announced last year.
Consumers also may be more restrained after a fourth-quarter spending spree. Spending rose at a 6 percent annual pace in the 2001 fourth quarter, the fastest in 3 1/2 years. Retail sales excluding automobiles rose 0.2 percent in February after a 1.2 percent gain in January.
The share of consumers planning to buy a home fell to 3.2 percent from 3.9 percent, as mortgage rates rose. The percentage planning to buy a car fell to 6.7 from 8.1.
The share planning to buy a major appliance slipped to 28.3 percent from 28.5 percent.
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