- The Washington Times - Tuesday, August 26, 2003

NEW YORK (AP) — Consumer confidence rebounded in August from a dip the previous month as thousands of surveyed households expressed a growing belief that better times were ahead, a private research group said yesterday.

Meanwhile, the government reported a surge in July for big-ticket items, and new-home sales dipped as rising mortgage rates turned off some house hunters, but still posted their second-best month on record.

Taken together, the readings “reflect that people are beginning to think the problems we’re having now are temporary,” said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis.

“People aren’t feeling really good about the economy, but that doesn’t stop them from taking advantage of bargains when they’re offered and spending the money they have,” Mr. Thayer said.

The New York-based Conference Board said its Consumer Confidence Index rose to 81.3 in August, up 4.3 points from a revised 77.0 in July. Analysts had expected a reading of 79.6 this month.

Also yesterday, the Commerce Department reported that manufacturers saw demand for durable goods — costly products expected to last at least three years — rise by a solid 1 percent in July. The figures, which were on target with analysts’ expectations, reflected broad-based gains from cars and machinery to communications equipment and computers.

Separately, July sales of new homes fell 2.9 percent, the department said, but it remained the second-best month on record.

Historically low interest rates have boosted everything from the housing market to car sales. Yesterday’s economic reports came a day after the National Association of Realtors said sales of previously owned homes soared to an annual rate of 6.12 million units in July — the best month on record.

The Conference Board’s gauge of consumer confidence has been on the rise since posting steep declines during the Iraq war preparations and fighting in February and March. The index lurched from a low of 61.4 in March to readings between 81 to 83 from April to June, before dropping to 77 last month.

Consumers surveyed by the Conference Board in August were increasingly optimistic about the economy over the next six months, though their assessment of current conditions deteriorated for the fourth straight month. The group’s expectations index rose to 94.4 in August from 86.3 in July, while the present situation index declined to 61.6 from 63.

Continued optimism hinges on developments in the labor market, said Lynn Franco, director of the Conference Board’s consumer research center.

Survey responses on employment were mixed, with the number of consumers reporting that jobs are “hard to get” rising to 34.1 percent, up from 32.7 percent in July. Those saying jobs were “plentiful” also rose, to 11.1 percent from 10.7 percent.

Looking ahead, 18 percent of consumers anticipate improvements in the job market, up from 16.6 percent last month. The number expecting to see their own income rise jumped to 20.1 percent, up from 15.9 percent in July.

“There’s no denying that the economy has picked up, but there’s also no denying that it’s very uneven and there are parts of the economy that are hurting,” said Mark Vitner, senior economist at Wachovia.

Consumer opinion is also driven by headlines, Mr. Vitner said. A run of bad news — such as corporate layoffs, the Northeast blackout and a bombing in Baghdad — may have colored views of the current situation.

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