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To: scotty who wrote (27098)	1/26/1999 2:08:00 PM
From: Giraffe	Read Replies (1) \| Respond to of 116762

Americans' personal savings rate effectively fell to zero in the last half of 1998 as spending increases outpaced income advances. With little in the bank and a lot in the stock market, households have become particularly sensitive to equities swings. Powerful Job Market Lifts Jan. U.S. Consumer Confidence By Scott Gerlach NEW YORK (Reuters) - A booming job market lifted U.S. consumers' confidence in the economy and their personal finances to a five-month high in January, even as a Wall Street rally fizzled. The Conference Board index of consumer confidence rose to 127.6 this month from an upwardly revised 126.7 in December, the private research firm said Tuesday. The reading was the highest since August, the month Russia's debt default helped push U.S. stock prices down some 20 percent. "Favorable employment conditions continue to lift consumer confidence levels," said Lynn Franco, associate director of the Conference Board's consumer research center. Economists had expected that confidence had remained strong in January, but not quite as robust as the report indicated. Recent employment data, retail sales and the housing market had suggested consumer purse strings remained loose. "Consumers are just very upbeat about everything," said Lawrence Horwitz, senior economist at Boston-based Primark Decision Economics. "The momentum is huge -- we do expect it to continue." Consumer spending, which accounts for about two-thirds of U.S. economic output, survived several months of wavering stock prices and uncertain economic prospects to enter 1999 at a powerful pace, Horwitz said. One spending indicator released earlier Tuesday complemented the Conference Board's report. The BTM/Schroder chain store sales index rose 1.3 percent in the week ended January 23, its largest gain since May 1998. U.S. businesses' seemingly unquenchable thirst for labor assures consumers will remain upbeat and willing to spend, economists said. "The real story here, what I look to this report for most, is the job situation," said Paul Kasriel, chief domestic economist at Northern Trust Corp. "It would appear the job market continues to be strong and tight ... and that's certainly a plus for consumer spending for the near term." In the Conference Board's January survey of 5,000 households, 45.7 percent of respondents called jobs "plentiful," up from 42.5 percent in December and the highest reading since July. Only 13.1 percent characterized employment as "hard to get," fewer than during any month in 1998. The thousands of layoffs announced by U.S. firms during the fourth quarter failed to dent government employment statistics or consumer optimism, economists said. A more forward-looking confidence measure, the Conference Board's expectations index, did slip in January, but only slightly. It fell to 97.9 from 98.7. The present situation index rose to 172.1 from 168.6. "While consumer expectations have softened over the last several months, this vital sector of the economy continues to be optimistic," the Conference Board's Franco said. "Consumers' appraisal of the current state of the economy is running at decade-high levels, signaling further growth in the months ahead." Some economists did express concerns that a stock market collapse could derail consumer confidence and spending without a moment's notice. Northern Trust's Kasriel called the stock market "the greatest risk to consumer spending right now." The Dow Jones Industrial Average is down 4 percent from its January high, and investors are nervous Brazil's financial troubles could swamp Latin America, a crucial market for U.S. exports. Americans' personal savings rate effectively fell to zero in the last half of 1998 as spending increases outpaced income advances. With little in the bank and a lot in the stock market, households have become particularly sensitive to equities swings. "We have the highest proportion of our financial assets in stocks since the 1960s. There's the potential for problems," Kasriel said