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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (52137)	5/28/2002 11:42:53 AM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Consumer confidence edged up, spending rises and home sales jump By JEANNINE AVERSA Associated Press Writer Tuesday May 28, 11:28 am Eastern Time WASHINGTON (AP) -- Consumer confidence nudged up, shoppers opened their pocketbooks wider and sales of previously owned homes jumped, suggesting that the nation's economic recovery remains on track. The Conference Board reported Tuesday that its Consumer Confidence Index rose to 109.8 in May, up from a revised 108.5 in April. Another report released by the Commerce Department showed that consumers increased their spending by 0.5 percent in April, on top of a 0.3 percent advance the month before. Although Tuesday's confidence and spending figures were weaker than many analysts were expecting, economists said they were still encouraged that consumers will continue to spend in the months ahead -- although probably at a modest pace -- and help along the recovery. In a third report, sales of existing homes shot up to a rate of 5.79 million in April, a 7 percent increase over March's level, according to the National Association of Realtors. April's performance marked the third highest monthly sales pace on record. Consumers, whose spending accounts for two-thirds of all economic activity in the United States, especially splurged last month on big-ticket items, such as cars. Low interest rates and discounts on a range of costly manufactured goods continue to motivate buyers. Americans' incomes -- including wages, interest and government benefits, went up 0.3 percent in April, matching analysts' expectations. In March, consumer spending rose 0.3 percent, while incomes grew by 0.4 percent. Federal Reserve Chairman Alan Greenspan has warned that the recovery could be less than sizzling because consumers, who kept buying throughout the slump, might not have a lot of pent-up demand coming out of it. Citing uncertainties about the vitality of the recovery, the Fed earlier this month decided to leave short-term interest rates unchanged at 40-year lows. Economists predict policy-makers will continue to hold rates steady through the summer. Many economists believe the economy, which grew at a brisk 5.6 percent pace in the first quarter, slowed to a rate of around 3 percent to 3.5 in the current quarter, a still respectable pace. Part of that expected slowdown may come from less enthusiastic shoppers, analysts say. In April, consumer spending on big-ticket durable goods, such as cars and appliances, rose 1.4 percent. In March, consumers cut back spending on these items by 0.2 percent. Spending on nondurable goods, such as clothes and food, went up 0.8 percent in April, up from a 0.2 percent rise. Spending on services rose 0.2 percent in April, down from a 0.5 percent advance the month before. Disposable incomes -- income after taxes-- grew 0.3 percent in April, after a 0.5 percent increase. Because disposable incomes grew less quickly than spending in April, the nation's personal savings rate, which is savings as a percentage of after-tax income, dipped slightly to 2.8 percent, from 3 percent in March. Consumers continued to spend in April despite the fact that the nation's unemployment rate hit a nearly eight-year high of 6 percent that month. Many economists predict the jobless rate will move as high as 6.5 percent by June because companies will be slow to hire back laid-off workers.