- The Washington Times - Wednesday, March 27, 2002

NEW YORK (AP) Consumer confidence soared to its highest level since September 11 and orders to U.S. factories for durable goods rose, fueled by increasing optimism about job prospects and a recovering economy.
The New York-based Conference Board said yesterday that its Consumer Confidence Index rose to 110.2 this month from a revised 95.0 in February, much higher than the 98 figure analysts were expecting. The reading is the highest since August, when it stood at 114.
Orders for costly manufactured goods expected to last at least three years grew 1.5 percent in February, though a lot of the strength came from a big jump in orders for airplanes and aircraft parts, the Commerce Department said in a separate report.
"With consumer confidence soaring, the consumer will lead us to the promised land," said Joel Naroff of Naroff Economic Advisors.
Treasury Secretary Paul H. O'Neill believes that in light of the recent string of reports the economy will continue strengthening the rest of the year.
"Consumers will grow more positive as job growth accelerates and the war on terrorism progresses," Mr. O'Neill said in a speech to the National Association for Business Economics. "By year-end, I expect we will approach the 3 to 3.5 percent growth rate that the economy can sustain."
The confidence index, based on a monthly survey of about 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity.
March's gains in optimism are especially high after concerns about jobs and accounting scandals unexpectedly pulled down confidence last month.
The number of consumers who rated the present economic outlook as good showed the largest increase in 25 years, while those with upbeat expectations for the next six months had the sharpest gain in nearly a decade, said Lynn Franco, director of the Conference Board's research center.
Economists credited the confidence surge to the brightening jobs outlook. Earlier this month, the Labor Department reported that February's jobless rate dropped to 5.5 percent after businesses added 66,000 jobs. It was the largest increase since February 2001.
"More than any other factor, the improving outlook for jobs is boosting consumer spirits," said Oscar Gonzalez, economist with John Hancock. "Nothing inspires confidence like having a job or knowing you can get one."
The latest manufacturing report also provided evidence that the battered sector is on the road to recovery after suffering through a slump that began a year and a half ago. Still, it indicated that manufacturers are still encountering some rough patches.
Orders for transportation equipment posted the biggest gain, rising 8.6 percent in February, after a 3.9 percent advance. But most of the strength came from a huge, 41 percent jump in orders for airplanes and aircraft parts. Orders for new cars and trucks fell 5.9 percent, after a 5.3 percent increase in January.
Excluding transportation orders, which can bounce around a lot from month to month, durable-goods orders dipped 1.3 percent in February, suggesting that the manufacturing recovery is fragile.
It marked the first such decrease in the past five months.

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