Consumer Confidence at 3-Decade High

Consumer confidence in the U.S. economy in June soared to its highest level in three decades, the Conference Board said Tuesday, suggesting strong spending will help cushion the ever-worsening outlook for manufacturing and exports to Asia.

The New York-based business research group said its index of consumer confidence rose to 137.6 this month from 136.3 in May, driven by an abundance of jobs, low interest rates, low inflation and stock market gains. It has exceeded 130 in six of the last seven months.

At the same time, factory activity in the Midwest slowed in June, according to the National Assn. of Purchasing Management of Chicago, suggesting a broader slowdown in U.S. manufacturing. The group’s manufacturing index fell more than expected to 52.9 this month from 56.3 in May.

“The U.S. economy at midyear is buffeted by powerful opposing forces,” said Bruce Steinberg, chief economist at Merrill Lynch in New York. “The Asia crisis is far deeper and taking a much larger toll on U.S. growth. At the same time, domestic demand has been stronger.”

The reports come as Federal Reserve Board policymakers convene for a two-day meeting on interest rates and to set their economic forecast for the balance of the year. Wall Street bond dealers surveyed by Bloomberg News don’t expect the Federal Open Market Committee to alter the overnight bank lending rate this week.

The index of U.S. consumer confidence reached an all-time high of 142.3 in October 1968, the Conference Board said.

Analysts, investors and Fed policymakers alike watch measures of consumer sentiment as a gauge of future spending, which amounts to more than 60% of the nation’s economic output.

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Consumer Confidence

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

June: 137.6

Source: Conference Board