Consumer Confidence Rises Again
Tuesday, 27 April 1999
N E W Y O R K (AP)
A STRONG job market and a surge in wages unseen in a
generation boosted consumer confidence for the sixth straight
month in April, as Americans shrugged off the war in Kosovo,
rising gas prices and concerns that stocks are too high.
"The fact is, life is going on in spite of those things. I think it's that
simple," said Mona Doyle, president of Consumer Network Inc., a
Philadelphia research group that studies consumer issues. "People
have so much to do, if there's a Zeitgeist of today it's 'whatever
works.' ... They don't see doom around the corner."
The Conference Board, a private business research group,
reported its consumer confidence index rose nearly a full point to
134.9 from a revised 134 in March, a stronger performance than
economists had expected. An index designed to measure
consumer expectations for the next six to nine months had an
even bigger increase, rising to 108 from 105.5.
The survey is an important economic indicator because consumer
spending accounts for two-thirds of the nation's overall economic
activity.
The driving force behind the current bullishness has been the lift
provided by a labor market where jobs are more plentiful than
any time in recent memory and, as a result, starting wages for
skilled workers are on the rise, economists said.
"We've moved into this wonderful labor market situation where if
you really hate your job, you feel you can go get another job ...
You don't do it, but it makes you feel good," said James Annable,
chief economist at BankOne Corp. in Chicago.
The economy's steady growth has created the rare combination of
low unemployment and low inflation, giving people greater ability
to spend. The Commerce Department reported Tuesday that
average income last year was $26,412, up 4.4 percent from 1997,
significantly outpacing inflation.
"We're generating real wage growth faster than we've seen in a
generation," said Annable. "Nothing makes people feel better
than that."
Between the early 1970s and the early 1990s, real wages grew by
a paltry half percent a year, Annable said.
Nonetheless, economists had anticipated the consumer
confidence figure would remain flat in April. Instead it continued
a steady rise that began last fall, in tandem with a rebound in the
stock market.
The Dow Jones industrial average briefly fell below 7,500 in early
October of last year, but on Tuesday it registered another in a
series of all-time highs and marked its first close above 10,800.
Although many analysts fear that the stock market's lofty levels
make it ripe for a fall, there are few signs of trouble. The
Standard & Poor's 500-stock list also reached a new high
Tuesday.
The rising stock market has been more of a boon than a bane,
said Sandra Shaber, an economist at WEFA, a Philadelphia
economic forecasting and consulting company.
"The fact that the stock market has gone through a rebound ...
makes people feel good and richer and willing to buy stuff," said
Shaber, who specializes in consumer spending.
While some shoppers interviewed Tuesday around the country
agreed with the economists' assessment of the nation's general
mood, they were skeptical that fatter wallets were the
underlying reason.
"We're not faced with any kind of unbearable situations these
days," said the Rev. Clarence Pemberton, who was shopping for
computer software for his Philadelphia Baptist church. "So
everyone feels better about day-to-day life and with how they
spend their money," he said. "They're in better moods."
In another sign of economic strength, the National Association of
Realtors reported Tuesday that sales of existing single-family
homes rose to a record high in March. The annual rate of 5.05
million units in March, up from February's 5.02 million rate, broke
the previous high of 5.04 million set in January. The figures are
adjusted for seasonal variations.
The record sales pace at the outset of 1999 follows an
unprecedented year of 4.78 million existing home sales in 1998.
March was the fourth consecutive month that the sales rate
topped 5 million.
"A combination of factors - excellent housing affordability
conditions and a strong desire by consumers to buy - are keeping
the market incredibly strong," said Sharon A. Millett, president of
the real estate group.
The consumer confidence index, started in 1967, is compiled from
responses to questions sent to 5,000 households nationwide. The
survey polls consumers on matters ranging from job prospects to
buying plans. The index compares results to its base year, 1985,
when it stood at 100. |
