Consumer Confidence Continues to Grow
Surging consumer confidence in April overshadowed a modest pickup in orders for costly manufactured goods during March as industry and government reports Tuesday signaled steady growth ahead.
The Conference Board said its index of consumer confidence bounced up to 136.7 from 133.8 in March. The business research group’s monthly report is watched closely because consumers fuel two-thirds of economic activity.
Separately, the Commerce Department said orders for costly durable goods from new cars to refrigerators rose modestly in March by 0.4% to a seasonally adjusted $186.63 billion after dropping 0.8% in February.
Manufacturing industries were restrained in March by unexpected weakness in demand for commercial aircraft. Excluding transportation products, March orders gained solidly by 0.9% on top of a 1.1% February advance.
The latest economic reports failed to settle edgy financial markets, still reeling from huge drops Monday, and brought more warnings that growth was uncomfortably brisk for Federal Reserve Board policymakers concerned about inflation.
“We have a very, very strong and dynamic economy,” Fed Gov. Edward Kelley said in testimony before a Senate panel. He later refused to comment on published reports that Fed policymakers in March shifted to a bias toward raising interest rates instead of remaining neutral on the possibility.
Private analysts said the indicators pointed to growth.
“The upturn in confidence strongly suggests that the U.S. economy will continue its solid, stable growth,” said Lynn Franco, associate director of the Conference Board’s Consumer Research Center.
Economist Joel Naroff of First Union Corp. in Charlotte, N.C., said the April consumer confidence reading was exceeded only once in the past three decades--when it touched 137.4 in February this year, the highest since 137.9 in June 1969.
That assures consumer spending will remain robust over the next six months, Naroff said, adding: “That is precisely what is worrying Federal Reserve policymakers” concerned that strong demand might trigger inflation by pushing prices up.
Treasury Secretary Robert E. Rubin told reporters he thought Asian imports were keeping a damper on U.S. prices and said: “I continue to think the most likely scenario by far is a track of solid growth and low inflation.”
There were hints that the manufacturing sector might be losing steam, as order backlogs dipped for a second straight month, down 0.8% to $513 billion after a February fall of 0.5%. But Jerry Jasinowski, president of the National Assn. of Manufacturers, said the report showed “the economy continues to advance, although at a somewhat slower pace than in 1997.”
The biggest pickup in March orders was for electronic and electrical equipment, which jumped 2% to $31.52 billion after a 1% February fall. Industrial machinery orders, which includes computers, rose solidly by 1.9% to $37.29 billion in March following a 3.3% surge in February. But primary metals orders dropped by 4.4% to $14.81 billion after a 2.8% increase in February.
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Consumer Confidence
From a monthly survey of 5,000 U.S. households. Index; 1985=100.
April: 136.7
Source: Commerce Department
