U.S. consumer confidence unexpectedly
rose in January to a six-month high after the economy added more
jobs and incomes grew, raising the odds that spending will spur
the economy.
The Conference Board’s index increased to 103.4 from a
revised 102.7 in December that was higher than first reported, the
New York-based research group said Tuesday. Optimism about the
current economic situation rose to the highest since May 2002,
helping fuel gains in stock prices and the dollar.
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Consumer purchases probably rose at the fastest pace in more
than four years from July through December, and weekly retail
surveys suggest shoppers haven’t let up this month. Last year was
the best on record for sales of previously owned homes, the
National Association of Realtors said Tuesday.
“Consumer spending has been stellar for the past two
quarters, so that these levels of consumer optimism are evidently
consistent with robust demand,” said Stephen Stanley, chief
economist at RBS Greenwich Capital in Greenwich, Conn.
Previously owned homes sold at a 6.69 million annual rate in
December after 6.92 million a month earlier, the Washington-based
Realtors group said. Existing home sales totaled 6.675 million in
2004, a 9.4 percent rise from a year earlier.
Economists forecast the confidence index would fall to 101
this month, based on the median of 65 forecasts in a Bloomberg
News survey, from December’s previously reported reading of 102.3.
Estimates ranged from 98 to 107.5, and just nine of the economists
surveyed forecast an increase.
Next week, Federal Reserve policy-makers are forecast to
raise interest rates a sixth time since June to keep inflation
from accelerating, according to a Bloomberg News survey. Central
bankers on Dec. 14 raised their target rate by one-quarter point to
2.25 percent.
“We’re optimistic for another strong year this year,” said
David Ratcliffe, chief executive officer at Southern Co., in an
interview. Southern is Georgia’s largest utility owner. “The
economy is strong and usage is up. It seems like a good indication
of the economy being strong.”
“The consumer is feeling OK about the present economy, but
there is nervousness,” said Delos Smith, a Conference Board
economist, in an interview. “There is no question there is a lot
of nervousness out there. Consumers aren’t worried about the stock
prices. It is energy.” Consumers “are very sensitive about
gasoline prices.”
Bloomberg News
