Consumer Confidence Reaches 4 1/2-Year High : Economy: Conference Board data suggests growth will continue. But signs of weakness also emerge.

American consumer confidence surged in December to the highest level in 4 1/2 years, a leading business group reported Tuesday in a survey that suggests the economy will expand further next year.

But new signs of weakness also emerged in the data gathered by the Conference Board, as well as in a separate report from a real estate trade group that says rising interest rates may be starting to slow the economy.

The Conference Board’s survey shows the perception of more job opportunities and low inflation have made consumers more comfortable about their present financial security.

The group’s index of consumer sentiment, based on survey results, rose to 102.2, up from a revised reading of 100.4 in November. It was the highest since the 102.4 reading in June, 1990.

The index, calculated from a base of 100, is derived from responses to questions sent to 5,000 households nationwide on topics ranging from local job availability to plans to buy a washing machine.

It is considered useful by some economists for anticipating the spending and borrowing patterns of consumers, who account for two-thirds of all U.S. economic growth.

Fabian Linden, head of the Conference Board’s consumer research unit, attributed the confidence levels to the four-year low in national unemployment rates and the country’s benign inflation rate, which has remained below 3% for the third straight year.

“These two measures are among the most important factors affecting consumer confidence,” he said. “The latest survey readings strongly suggest that 1995 should be another good year for the U.S. economy.”

Nonetheless, the survey shows that expectations for the next six months dropped in December, suggesting consumers don’t necessarily expect the better times to last.

Some economists saw this as an indication that interest rates, which have been rising since February, might be forcing consumers to re-evaluate whether they’ll be able to afford a new house, car or appliance next year.

The National Assn. of Realtors, a real estate trade group, said sales of previously owned homes dropped 2.6% in November to an adjusted annual rate of 3.81 million, the lowest since June, 1993.

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Consumer Confidence

From a monthly survey of 5,000 U.S. households. Index: 1985=100

Dec. 1993: 79.8

Dec. 1994: 102.2

Source: Conference Board