NEW YORK (AP) Consumer confidence strengthened for the second straight month in January and orders to U.S. factories for durable goods climbed more than expected, two economic reports said yesterday, suggesting that an end to the nation’s economic slump may be in sight.
The Conference Board, a New York-based industry group, reported its Consumer Confidence Index rose to 97.3 this month from a revised 94.6 in December. Analysts were expecting a reading of 96.
The Commerce Department said that orders to U.S. factories for durable goods items expected to last three years rose a larger-than-expected 2 percent in December. The gain surpassed analysts’ expectations for a 1.5 percent increase.
“This is further evidence that the consumer is recovering from September 11, which clearly caused them to be anxious about the future and their current situation,” said Dan Laufenberg, chief U.S. economist at American Express Financial Advisors in Minneapolis.
The Conference Board’s index, based on a monthly survey of about 5,000 U.S. households, is closely watched because consumer confidence fuels consumer spending, which accounts for about two-thirds of the nation’s economic activity.
The index compares results with its base year, 1985, when it stood at 100. The January figure was the highest since the September reading, when it reached 97. But that number didn’t take into account the September 11 terrorist attacks in New York and Washington.
Economists said the January index indicates that consumers are starting to recover from the shock of the disasters and are more inclined to open their wallets given the success in the war in Afghanistan, higher stock prices and a slowing tide of massive layoffs.
“If consumers are feeling more confident with their economic situation, that augurs well for continued consumer spending, which is an absolute necessary condition for the economy to recover,” said Mark Zandi, chief economist at Economy.com in West Chester, Pa.
But manufacturers have borne the brunt of the ailing national economy, which slid into a recession in March. To cope, they have sharply cut production, trimmed hours and laid off workers. Although companies continue to eliminate jobs, American households appear to be far less anxious than in recent months about their employment situation, the Conference Board said.
“While the economy has not turned around yet, the worst may well be over,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.