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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (14063)	5/30/2000 8:08:00 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 15132

Looks like Greenspan is going to have to throw some folks out of work when all is said and done: Consumer Confidence Surges Interest-Rate Hikes Have Not Slowed Spending By SETH SUTEL .c The Associated Press NEW YORK (May 30) - American consumers brushed aside concerns about the jumpy stock market and higher interest rates this month, registering their strongest level of confidence in economic conditions since January, when it reached an all-time high. The results of the monthly survey released Tuesday marked a sharp turnaround from April and confounded expectations that the main driver of the economic expansion, consumer spending, was headed for a downturn. The report, which added to pressure on the Federal Reserve to keep raising interest rates, didn't stop a dramatic surge in stock prices as traders staged a bargain-hunting buying binge. The Nasdaq composite index registered its biggest percentage gain ever, shooting up 7.9 percent, and the Dow industrials gained 2.2 percent. The Conference Board, a New York-based research group, said its Consumer Confidence Index rose to 144.4 in May, approaching its all-time high level of 144.7 reached in January. The closely watched indicator had declined for three months prior to May as wild gyrations in the stock market took their toll on consumer sentiment. Economists had expected another decline in the index in May to 136 from a revised 137.7 in April. But with the stock market showing some signs of order recently following a chaotic roller coaster ride, economists say consumers are now focusing on the mainly positive economic fundamentals that have been powering an unprecedented expansion in the U.S. economy. ``Stock prices have been going down, but people have been getting used to it and realizing that the market is not collapsing,'' said David Wyss, chief economist of Standard & Poor's DRI. ``Everybody's got a job, incomes are going up, inflation is still low - all's right with the world.'' Market reaction to the May survey was muted as traders instead went on a shopping spree among shares beaten down in the spring selloff. In addition, investors decided to wait for reports later this week on manufacturing and the labor market as a better indicator of more inflation-fighting rate increases by the Federal Reserve. The Dow industrials rose 227.89 to close at 10,527.13 and the technology-focused Nasdaq gained 254.37 to 3,459.48. The Nasdaq point gain was the second-biggest ever, just a shade below the 254.41 of April 18. The consumer confidence report is closely watched by economists and financial markets for signs of future trends in consumer spending, which makes up about two-thirds of America's economy. The turnaround in consumer confidence came despite an aggressive campaign by the Federal Reserve to slow down the economy. The Fed has raised short-term rates six times over the past year, including a half-point increase on May 16, the biggest hike in five years. Signs are beginning to emerge that the higher borrowing costs are beginning to slow down purchases of major items such as homes. Nonetheless, the Conference Board's survey showed that consumers' appetite for big-ticket purchases remains strong. The May results found that 3.6 percent of respondents intended to buy a home vs. 3.2 percent the month before. Also, 32 percent said they planned to buy a major appliance, up from 29.7 percent. Lynn Franco, director of the Conference Board's research center, said consumers were now focusing in the favorable conditions in the labor market, including a 30-year low in unemployment. ``Volatile financial markets and interest rate hikes are not expected to have a significant impact on consumers' spirits,'' Franco said. She predicted that consumer confidence would continue to remain strong through the summer. Analysts said that they wanted to see if the rebound in confidence translates into a new spurt in sales before the Fed's next meeting on interest rates, June 27-28. ``We'll be watching things like car sales to see if consumers actually do spend more,'' said Gary Thayer, chief economist for the St. Louis-based brokerage A.G. Edwards & Sons. ``What we'll need to see is some confirmation of these data and then we may have a better idea of what the Fed's going to do.'' The consumer confidence figures are based on a survey of 5,000 U.S. households and compares the index to the base of 100 in 1985. The data is compiled by the Conference Board, the same group that puts out another widely cited monthly economic report, the Index of Leading Economic Indicators. AP-NY-05-30-00 1746EDT