- The Washington Times - Tuesday, June 29, 2004

NEW YORK (AP) — Consumer confidence has jumped to a two-year high in June, buoyed by an improved job market and softening gasoline prices, the New York-based Conference Board reported yesterday.

The upbeat news contrasted with early reports this week of a slowdown in retail sales for June. But economists shrugged off those disappointing figures, which were caused primarily by cool weather in the South and Northeast, as a temporary setback.

The Consumer Confidence Index, which barely budged in May, increased nearly nine points to 101.9, up from a revised reading of 93.1 in May. The latest reading was much better than the figure of 95 that analysts had expected.

Lynn Franco, director of the Conference Board’s Consumer Research Center, said the strong improvement in business conditions propelled consumer confidence to the highest level since June 2002, when the indicator was 106.3.

The Present Situation index is now 104.8, up from 90.5 in May. The Expectations Index, which measures consumers’ outlook over the next six months, rose to 100 from 94.8.

“Looking ahead, consumers expect the economy to continue to grow at a healthy clip and to continue to generate additional jobs,” Miss Franco said. “And, with prices at the pump beginning to ease, the short-term outlook remains favorable.”

The survey’s cutoff for June’s preliminary results was June 22, thus before the transfer of power to Iraq.

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

Mark Vitner, an economist at Wachovia Corp., said he believes the recent improvement in consumer confidence largely reflects improving employment conditions.

He said that June’s lackluster retail sales were “only temporary,” largely because of the undesirable weather conditions and the lingering effects of higher gasoline prices, which have come down and are the lowest in two months.

Both Wal-Mart Stores Inc., and Target Corp. warned Monday that sales at stores open at least a year for June would be lower than projected. The nation’s retailers are expected to report their June sales figures July 8.

Mr. Vitner added, “If gasoline prices keep coming down over the summer, then the damage is limited.”

If gas prices don’t continue to decrease, Mr. Vitner thinks there will be an impact on consumer spending in 2005.

Joel L. Naroff, president and chief economist at Naroff Economic Advisors Inc., said that while he is encouraged with the consumer confidence figures, there is still plenty of uncertainty out there.

“We have to see wage increases start to kick in before we see consumers feel really good,” he said. As for Iraq, Mr. Naroff believes that consumers are shifting their focus away from tensions there as the economy rebounds.

“When the economy wasn’t good, Iraq really weighed on people’s minds,” he said.

Analysts expect to hear of another robust job boost when the Labor Department releases its job figures Friday after three months of solid gains. Analysts expect the unemployment rate to remain at 5.6 percent. But they are counting on nonfarm payrolls — government and private employers — to add 250,000 jobs.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide