- The Washington Times - Tuesday, May 25, 2004

NEW YORK (AP) — Consumer confidence barely budged in May as worry about rising gasoline prices and heightened political uncertainty overseas offset an improving employment outlook, the Conference Board reported yesterday.

Still, the report’s conflicting results from consumers about jobs made some economists fret that the public could pull back on spending if the climate deteriorates.

“Confidence is holding up, but there is also a recognition that the foundation isn’t as strong as one might think,” said Joel L. Naroff, president and chief economist at Naroff Economic Advisors in Holland, Pa.

In a separate report, home buyers, scrambling to seal a deal before mortgage rates move higher, propelled sales of previously owned homes in April to the second-best month on record.

The Consumer Confidence Index edged up to 93.2 from a revised 93 reading in April, the New York-based group said. The latest reading was slightly below the 94 figure that analysts had expected.

Lynn Franco, director of the Conference Board’s consumer research center, said that strong employment gains in March and April were helping boost consumers’ evaluation of current conditions.

“This has made consumers more positive about short-term prospects in the months ahead,” she said.

“The pickup in the job market is offsetting the impact of rising gas prices and escalating tensions overseas.”

Economists closely track consumer confidence because consumer spending accounts for two-thirds of U.S. economic activity.

Consumers are being presented with conflicting news. On one hand, they are seeing a broader-based job recovery, but they are also facing higher gasoline prices, higher interest rates and bad news from Iraq.

That has translated to mixed signals from consumers in the confidence report.

For example, while the number of consumers reporting that jobs are plentiful was on the rise, the number of respondents saying that jobs are hard to get increased as well.

“Consumers are facing the issues in the world and dealing with them,” Mr. Naroff said.”

But the problem is they are dealing with them by some people feeling more comfortable and others feeling less comfortable. It is not clear that the people that keep saying things are better will continue to say that,” the economist said.

Mr. Naroff added that if worries continue, consumers may cut back their spending.

“Consumer confidence is at a level that is consistent with modest economic growth,” said Mark Vitner, senior economist at Wachovia Corp.

And he said what will keep the index in the mid 90s is the mixed job picture.

The Labor Department is to release its job figures on June 4. Analysts expect the unemployment rate to remain at 5.6 percent.

But they are counting on nonfarm payrolls — government and private employers — to add 215,000 jobs.

Meanwhile, the National Association of Realtors reported that sales of existing homes rose to a seasonally adjusted annual rate of 6.64 million last month, a 2.5 percent gain over March.

The pace of April’s sales was second only to the all-time monthly high rate of 6.68 million in September 2003.

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