- The Washington Times - Wednesday, May 29, 2002

NEW YORK (AP) Consumer spending and home sales rose in April, and confidence in the economy edged higher in May. But consumers' outlook for the rest of the year has worsened, suggesting a slower economic recovery.
The Conference Board said yesterday that its consumer confidence index rose to 109.8 this month from a revised 108.5 in April. While the number of consumers rating the current economy as good increased, their outlook on business conditions and jobs for the next six months soured slightly.
"The numbers don't point to any risk that the recovery is going to peter out. They do point to a rate of growth in the economy that has slowed," said Mark Vitner, an economist at Wachovia Securities.
Still, consumer spending remains strong. The Commerce Department reported yesterday that Americans increased their spending by 0.5 percent in April, on top of a 0.3 percent gain the month before. Income rose 0.3 percent in April.
In a third report, sales of existing homes shot up in April to a seasonally adjusted annual rate of 5.79 million, a 7 percent increase over March's level, according to the National Association of Realtors. April's performance marked the third-highest monthly sales pace on record.
The confidence and spending figures were slightly weaker than analysts' expectations.
Economists said they believe consumers will continue to spend in the months ahead, but probably at a slower pace. Consumer spending accounts for two-thirds of all economic activity in the United States.
Consumers splurged in April on big-ticket items, such as cars and appliances. Spending on such goods rose 1.4 percent after a 0.2 percent drop in March.
Low interest rates and discounts attracted buyers.
The consumer confidence index compares results to its base year, 1985, when it stood at 100. May's figure of 109.8 falls slightly below the seven-month high of 110.7 reached in March. Confidence tumbled after the September 11 attacks.
Consumers expecting more jobs to become available in the next six months fell to 13.7 percent from 14.8 percent in April, the Conference Board said.
Meanwhile, fewer consumers 20.6 percent versus 21.1 percent in April expected their incomes to increase in the next six months.
Many economists believe the economy, which grew at a brisk 5.6 percent pace in the first quarter, slowed to a rate of about 3 percent to 3.5 percent in the current quarter, a still respectable pace.
The nation's unemployment rate hit a nearly eight-year high of 6 percent in April. Many economists predict it will climb as high as 6.5 percent by June.


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