Consumer Confidence Appears to Be Reviving
U.S. consumer sentiment improved markedly in recent weeks as the war in Iraq showed signs of coming to an end, a report indicated Friday.
The University of Michigan’s preliminary April index of consumer sentiment rose to 83.2 from 77.6 in March. The final reading for March was the lowest since September 1993.
Economists had forecast a rise to 78.1 for the preliminary April survey.
Many people have been betting that a winding down of the war in Iraq would bolster consumer confidence, which had been at an ebb because of concerns about the war and how it would affect the U.S. economy.
Economists said expectations for the confidence number had started to creep higher in recent days.
Retail sales data for March released Friday also gave positive signs for the economy. Sales rose a robust 2.1% overall, far more than the 0.6% gain expected by economists and the biggest monthly rise since October 2001.
The gain was fueled by a big rise in vehicle sales, but even excluding autos the index was up 1.1%, according to the Commerce Department.
“The turning point has come,” said Ram Bhagavatula, chief economist at RBC Bank of Scotland Financial Markets. “Consumers keep surprising, and the revival in confidence should help support spending.”
Tempering the joy was a 1.5% rise in producer prices of finished goods, though analysts said the recent decline in energy prices should restrain inflation.
The producer price index, which measures prices paid at the factory, farm and refinery gate, jumped 1.5% last month after a 1% gain in February, the Labor Department said. The March gain was more than triple the 0.4% rise projected by U.S. economists in a Reuters survey.
Volatile food and energy costs aside, the core PPI rose by 0.7%, in contrast to expectations for no change.
Analysts did voice some caveats on the positive retail figures, suggesting they overstated the numbers in February, a month marked by bad weather that may have exaggerated its weakness.
Much of the rise in retail sales was attributable to a steep, 5.3% climb in auto sales, a sector that has been volatile for months as carmakers launched incentive schemes in a struggle for market share. Excluding autos and home improvement goods, retail sales were up only 0.2%.
