Consumer confidence, a key indicator measuring
the force behind the economy's long expansion, soared in January to
the highest level ever reached in the 32 years that the data has
been compiled, the Conference Board reported Tuesday.
"People looking for confirmation that the consumer confidence
bubble will soon burst have a further wait in store," said Lynn
Franco, research director for the Conference Board.
"An expanding global economy and a robust job market suggest
that consumer optimism and consumer spending could rise even
further in coming months," Franco said.
The consumer confidence index rose to 144.7 in January, up from
141.7 in December. It was the highest level measured in the 32
years that the business-financed research group has been keeping
records on the data. The performance was stronger than expected.
Consumer sentiment is closely watched by economists since
spending by consumers is a major engine behind the current economic
boom, making up about two-thirds of the nation's overall economic
Both components of the confidence index improved consumers'
assessment of current business conditions as well as their
expectations for the future.
The monthly survey of 5,000 U.S. households reported 47 percent
of those responding rated the current business environment "good"
and 54 percent said jobs were "plentiful."
The strong reading is another indicator of the staying power of
the current expansion in the U.S. economy, which began in March of
1991. The expansion tied the record 106-month expansion of the
1960s and surpasses it next month.
However, the report could also add to worries about inflation
down the road and pre-emptory strikes against it in the way of
interest rate increases from the Federal Reserve. The Fed's
policy-making committee meets next week to decide whether to change
interest rates for the fourth time since last June.
The Conference Board's report also said that consumers' optimism
about future economic conditions is continuing to improve. The
percentage of respondents anticipating better business conditions
over the next six months rose to 19.6 percent from 17.5 percent
last month. Those expecting conditions to worsen fell to 3.3
percent from 4.8 percent.
The bond market, which is highly sensitive to concerns about
inflation, took the strong reading in stride. The benchmark 30-year
Treasury bond, which rose Monday as investors took money out of the
swooning stock market, edged higher this morning, sending its yield
dipping to 6.63 percent from 6.64 percent late Monday and a 2 1/2-year
high of 6.75 percent last week. Stock prices were little changed.