Consumer Confidence Jumps in January

U.S. consumer confidence jumped for a second straight month in January, a research group said Tuesday, supporting expectations that resilient consumer spending will bolster an economic recovery.

A separate Commerce Department report showing orders for big-ticket manufactured goods rose by 2.0% to $176.4 billion in December, offering hope that the nation’s factories will recover soon and help lift the economy from recession.

The Conference Board, a New York-based research group, said its closely watched index of consumer confidence rose to 97.3 in January, beating Wall Street expectations and up from a revised 94.6 in December.

Consumers’ expectations for the next six months reached the highest point in more than a year, helping to reinforce hopes that spending, which represents about two-thirds of economic activity, will remain resilient in months ahead.

That optimism was reflected by a Los Angeles Times poll of 1,845 Californians conducted Wednesday through Sunday.

Forty-three percent of those surveyed said they expected California’s economy to be in better shape in six months than it is now, compared with 11% who thought it would be worse. Meanwhile, 73% said they felt secure about their personal finances.

Evidence is mounting that the Federal Reserve, which is expected to announce its latest decision on interest rates today, may have lowered borrowing costs enough to usher in an economic recovery.

The Conference Board’s expectations index surged in January to its highest level in more than a year, up to 96.9 from 92.4 in December, led by building confidence about the business outlook and prospects for employment, the report said.

That subcomponent, which gauges consumers’ views about the six months ahead, is now up more than 25 points since a sharp plunge after the Sept. 11 attacks.

The present situation index, which measures Americans’ views of the economy right now, remained unchanged at 97.8, signaling the economy is laying the foundations for a shift from recession back to growth.

The present situation index read 170.5 in January 2001, two months before the economy slipped into recession.

Americans still have a pessimistic view of the current job situation, with 22.7% saying jobs are “hard to get,” up from 21.9% in December. December’s gain in orders for durable goods--big-ticket items intended to last three years or more, ranging from washing machines to airplanes--was stronger than the 1.3% gain forecast by economists. It was the second increase in orders in the last three months.

But orders for the entire calendar 2001 year fell by 13.2%--the weakest showing since 1992, the earliest year for which comparable data are available.

Excluding transportation, orders rose by 1.4% after a 0.7% rise in November. Excluding defense items, orders rose 1.7% in December, compared with 1.4%.

Inventories fell for an 11th consecutive month, down 0.4% to $284.7 billion. Notable among declines for the month was a 2.6% dip in orders for computers and related products.

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Reuters was used in compiling this report.