Consumer confidence rises in March to highest level in seven months, survey says

NEW YORK (AP) _ Consumer confidence surged in March to its highest level in seven months, bolstered by growing optimism about the economy and the job market. <br><br>The New York-based Conference Board

Tuesday, March 26th 2002, 12:00 am

By: News On 6

NEW YORK (AP) _ Consumer confidence surged in March to its highest level in seven months, bolstered by growing optimism about the economy and the job market.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index rose to 110.2 this month from a revised 95.0 in February. Analysts were expecting a reading of 98.

The index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity.

``The latest gains are striking,'' said Lynn Franco, director of the Conference Board's research center. ``This new boom in confidence should translate into increased consumer spending and stronger economic growth ahead.''

The number of consumers who rated the present economic outlook as good had the sharpest gain in 25 years, while those with upbeat expectations for the next six months had the largest increase in nearly a decade, Franco said.

The index compares results to its base year, 1985, when it stood at 100. The March figure puts consumer confidence at the highest since August, when the reading stood at 114.

Economists said consumers' brightening jobs outlook keyed the surge in confidence. Earlier this month, the Labor Department reported that February's jobless rate dropped to 5.5 percent after businesses added 66,000 jobs. It was the largest employment increase since February 2001.

``More than any other factor, the improving outlook for jobs is boosting consumer spirits,'' said Oscar Gonzalez, economist with John Hancock. ``Nothing inspires confidence like having a job or knowing you can get one.''

Separately, the Commerce Department reported that orders to U.S. factories for big-ticket goods rose 1.5 percent in February, the third straight monthly increase, offering additional evidence that the economy is on the mend.

On Wall Street, key stock indexes were higher on the news. The Dow Jones average rose 102 points to 10,383 and the Nasdaq composite index rose 17 points to 1,829.

After slashing short-term interest rates 11 times last year, the Federal Reserve decided to leave rates unchanged last week, just as it did in January. Economists believe the Fed is preparing Americans for the possibility of higher rates this year.

John Silvia, Wachovia Securities' chief economist, said he expected consumer spending to grow in the next several months. Confidence and spending probably won't be severely tested unless the Fed decides to raise rates, possibly as early as May, he said.

``It will be a very good spring for retailers,'' Silvia said.

The Conference Board is a nonprofit research and business group, with more than 2,700 corporate and other members around the world.