Consumers Upbeat Despite Asian Turmoil
U.S. consumers spurned worry about turmoil in world financial markets in November, according to surveys issued Tuesday, confident a booming job market will keep their paychecks growing.
Two separate surveys showed rising levels of consumer confidence in November, signaling that mounting Asian economic woes so far have failed to daunt Americans’ optimism that a long-running expansion will continue into 1998.
A third report from a Realtors’ lobby group showed healthier sales of existing, or previously owned, homes in October. Sales rose 2.1% to a seasonally adjusted annual rate of 4.4 million, defying expectations for a fall.
Home buyers benefited from cheaper mortgages flowing from the flight-to-quality rush of investment money out of Asia and back into purchases of U.S. Treasury securities. Rates for a 30-year mortgage last week fell to a 21-month low of 7.18%.
Consumers fuel two-thirds of U.S. economic activity through their purchases of goods and services. Tuesday’s reports suggested the key consumer sector remained vibrant in the run-up to the holiday shopping season.
The Conference Board, a private business research group, said its index of U.S. consumer confidence rose to 128.3 from a revised 123.4 in October. About 5,000 households are surveyed in the monthly sampling of consumer sentiment.
“Consumers continue to express confidence about the health of the U.S. economy and expect these favorable conditions to continue well into 1998,” said Lynn Franco, associate director of the Conference Board’s consumer research center.
Satisfaction with current economic conditions was on the rise, too, pushing the group’s present situation index up to 158.9 in November, its highest reading since 1969, from 147.5 in October.
The U.S. economy is now in its seventh year of unbroken expansion since the last recession ended in March 1991. While growth is expected to slow in 1998, analysts say the economy remains healthy with low inflation and rising incomes.
Some sectors--notably exporters who sell in overseas markets and also face competition at home from their cheaper-priced goods--are feeling strain from financial instability in Asia and Latin America. But there was no sign that overseas woes were dimming consumer optimism.
“Recent turmoil on Wall Street and in worldwide financial markets, along with continuing layoff announcements, have not dampened consumer confidence,” Franco said.
A separate report from the University of Michigan followed a similar pattern, with its overall index of consumer sentiment rising to 107.2 in November from 105.6 in October, financial market sources said.
The current conditions component of the Michigan index rose to 114.9 in November from 109.8 in October, sources said.
Consumers’ confidence about their ability to make long-term financial commitments was reflected in the pickup in October existing-home sales, reported by the National Assn. of Realtors. Analysts had forecast that sales would dip to a 4.28-million-unit rate from 4.31 in September rather than climb to 4.4 million in October.
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Consumer Confidence
From a monthly survey of 5,000 U.S. households. Index: 1985=100
November ‘97: 128.3
Source: Conference Board
Existing-Home Sales
Seasonally adjusted annualized rate, in millions of units:
October ‘97: 4.4
Source: National Assn. of Realtors
