NEW YORK (AP) – April 27, 2010 – Americans' confidence in the economy rose in April to the highest level since September 2008, just as the financial crisis escalated, according to a private research group.
The upbeat reading, combined with bullish earnings reports this week
from companies ranging from Whirlpool Corp. to UPS Inc., offers more
hope the economic recovery is gathering steam.
The Conference Board, a private research group based in New York,
said Tuesday that its Consumer Confidence Index increased to 57.9, up
from a revised 52.3 in March. The April reading is the highest since
September 2008's 61.4. That was when the financial crisis intensified
with the collapse of Lehman Brothers, sending confidence into freefall
the following month. Economists surveyed by Thomson Reuters were
expecting a reading of 53.5.
The index – which measures how shoppers feel about business
conditions, the job market and the next six months – had been recovering
fitfully since hitting an all-time low of 25.3 in February 2009.
Economists watch the number closely because consumer spending
including health care and other major items accounts for about 70
percent of U.S. economic activity.
April's reading is still far from what's considered healthy. A
reading above 90 indicates the economy is on solid footing; above 100
signals strong growth. Still, the monthly survey of consumers showed
that consumers' current and short-term concerns about jobs and the
overall economy are easing.
One component of the overall index, which assesses how consumers feel
now about the economy, rose to 28.6 in April from 25.2 in March. The
other component, which measures shoppers' outlook over the next six
months, climbed to 77.4 from 70.4.
"Looking ahead, continued job growth will be key in sustaining
positive momentum," said Lynn Franco, director for The Conference Board
Consumer Research Center.
Economists believe confidence will remain relatively weak for at
least another year because companies haven't begun to dramatically ramp
up hiring.
Employers are expected to add 175,000 jobs in April, but economists
project unemployment will remain at 9.7 percent. The Labor Department is
due to release monthly job figures May 7.
Still, economists are more upbeat about growth prospects this year as
industries increasingly report better profits and add new jobs, though
they still anticipate the recovery to remain slow, a new survey by The
National Associations for Business Economics showed Monday. Seventy
percent of those recently polled by NABE believe real GDP will increase
by more than 2 percent this year, up from 61 percent who said the same
in January. Twenty-four percent are projecting real GDP will rise by
more than 3 percent.
In addition, two bullish reports released Friday – one on
manufacturing, the other on new home sales – offered signs that the
recovery is accelerating, and many economists are raising the estimates
for U.S. economic growth. First-quarter earnings reports from big
manufacturers including Caterpillar Inc. and Whirlpool along with
Tuesday's upbeat forecast from UPS are underscoring that consumer demand
is strengthening across all types of goods.
Against this economic background, signs of life in consumer spending
are sprouting this spring, and stores are primping for a recovery by
increasing inventories and re-evaluating their marketing.
Retailers reported a 9 percent increase in sales at stores open at
least a year for March, the biggest gain since March 1999, though much
of that was a result of an earlier Easter that pushed more spending into
March. Sales at stores open at least a year are considered a key
indicator of a retailer's health. March's performance marks the fourth
consecutive month of sale gains.
The Conference Board survey – based on a random survey of consumers
sent to 5,000 households from April 1-20 – showed worries about jobs
were easing. Those saying that jobs are "plentiful" increased to 4.8
percent from 4.0 percent, while those saying jobs are "hard to get"
decreased to 45.0 from 46.3.
Consumers were also more upbeat about the job outlook. The percentage
of consumers anticipating more jobs in the months ahead increased to 18
percent from 14.1 percent, while those anticipating fewer jobs fell to
20.0 percent from 21.4 percent. The proportion of consumers anticipating
an increase in their incomes declined to 10.3 percent from 10.8
percent.