Consumer Confidence Hits an All-Time High

Consumer confidence soared to an all-time high in January and upbeat Americans bought existing homes at a record pace last year, according to private reports Tuesday that also showed the good economic times are expected to last a while longer.

The Conference Board said its consumer confidence index for January surged to 144.7, the highest level in its 32-year history. The December reading was upwardly revised to 141.7 from 141.4 level previously reported, the private economic research group said.

The upbeat American consumer is underpinning the strong economic expansion, which is about to enter a record 107th consecutive month of growth in February, and analysts said this reading ensures that no quick slowdown lies ahead.

“An expanding global economy and a robust job market suggest that consumer optimism and consumer spending could rise even further in the coming months,” said Lynn Franco, director of the Conference Board’s Consumer Research Council.

The National Assn. of Realtors said 5.2 million homes changed hands last year, the fourth straight record year. But the housing market is starting to show some early signs of strain. The Realtors group said existing homes sales for December fell by 1.4% to an annual sales rate of 5.06 million homes.

Analysts said the December data show higher interest rates are pushing some marginal buyers out of the marketplace. Mortgage rates climbed by the end of December to 8.06%.

“With rates relatively high, we should see sales slowly fade,” said Joel Naroff, a private economist.

Still, economists said confident consumers will keep on buying houses, so they look for no dramatic decline in home sales any time soon.

The Conference Board’s Franco said the jobs component of the index shows healthy labor markets--unemployment is near 30-year lows--are underpinning the go-go attitude of the consumer.

The percentage of consumers who said jobs were plentiful rose two points to 54% in January, while those saying work was hard to find fell to 11.3% in January from 11.8% in December, the board said.

Looking ahead, consumers expect the strong economy to continue. The outlook six months ahead rose to 119.7, the highest since a 122.4 in January 1984, and up from an upwardly revised 115.0 in December. The current conditions index also posted a new record of 182.4 in January, up from an upwardly revised 181.7 in December.

The Conference Board compiles its monthly survey by sampling 5,000 U.S. households.

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Rising Rates Don’t Dampen Confidence

Despite surging interest rates, consumer confidence has continued to climb, reaching a record high this month. The consumer confidence index versus yields on 10-year Treasury notes, which help determine mortgage rates:

Yield on 10-year Treasury note:

Consumer confidence index:

Tuesday:

6.69%

January:

144.7*

*1985 = 100

Sources: Bloomberg News, Associated Press