Consumer confidence dips slightly

Posted 7:55AM on Wednesday 1st May 2002 ( 23 years ago )

NEW YORK - Consumer confidence dipped in April from a seven-month high, but optimism about the economy still remained higher than analysts' expectations. The New York-based Conference Board said Tuesday that its Consumer Confidence Index fell to 108.8 this month from a revised 110.7 in March. Analysts were expecting a reading of 107.5. The industry group's 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. ``This month's retreat in confidence was caused primarily by a softening in consumers' assessment of current economic conditions,'' said Lynn Franco, director of the Conference Board's research center. Still, despite the dip, ``consumers' expectations remain virtually undaunted and signal continued expansion in the months ahead,'' she said. The index compares results to its base year, 1985, when it stood at 100. Before falling in April, consumer confidence was at its highest since August, when the reading stood at 114 prior to the Sept. 11 attacks. On Monday, the Commerce Department reported consumer spending and incomes rose by 0.4 percent in March, offering hope that consumers would continue bolstering the economic comeback. On Wall Street, key stock indexes were higher on the news by midmorning Tuesday. The Dow Jones average rose 113 points to 9,933 and the Nasdaq composite index rose 22 points to 1,678. To help boost the economy, the Federal Reserve slashed short-term interest rates 11 times last year. Citing signs of a rebound, the Fed opted to leave rates - now at 40-year low- unchanged in January and March. Many economists believe the central bank will hold rates steady at its May 7 meeting and possibly into the summer. In its report, the Conference Board said consumers' assessment of current business conditions eased slightly. Those rating conditions as good declined to 19.7 percent from 21.0 percent in March. Consumers who felt business conditions were bad rose to 19.4 percent from 18.3 percent. Consumers reporting that jobs currently were plentiful inched up to 20.9 percent from 20.6 percent, while those claiming jobs were hard to get also increased, to 22.5 percent from 21.1 percent. Regarding prospects for the next six months, consumers were mixed. Those expecting an improvement in business conditions increased to 26.1 percent from 25.4 percent, while consumers expecting conditions to worsen also rose, to 6.4 percent from 6.2 percent in March. As to their job outlook, 22.4 percent of consumers expect more jobs to become available in the next six months, up from 20.7 percent last month. Those expecting fewer jobs rose to 14.7 percent from 13.5 percent. About 21.2 percent of consumers expect their incomes to increase, down from 22.7 percent in March, the board reported. The Conference Board is a nonprofit research and business group, with more than 2,700 corporate and other members around the world.

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