Confidence slips on pessimism
Wednesday, April 1, 1998BY RACHEL BECK
The Associated Press
NEW YORK -- Concerns that the healthy U.S. economy has peaked sent consumers' confidence sliding in March from the 29-year high reached a month earlier.
The Conference Board reported Tuesday that its index of consumer confidence fell to 134.3 in March from a revised 137.4 in February. The index was below Wall Street analysts' expectations for the month.
''Consumer confidence went up to an unreasonably high level in February,'' said Sung Won Sohn, chief economist at Norwest Corp. ''Now, consumers are backtracking from their over-optimism.''
The report came as economists looked for new data signaling that the economy is growing at a less inflationary pace. Consumer sentiment is important because consumer spending accounts for two-thirds of the nation's overall economic activity.
Thanks to low unemployment and strong growth, Americans relished the healthy economic climate in recent months. In February, their confidence reached its highest level since June 1969, when it hit 137.9.
But consumers are wary that the economy's pace might soon slow as a result of Asia's economic woes, which already have hurt profits at a number of large U.S. corporations.
''The economy has been so good, many consumers are concerned that it can't get much better, and we will start losing steam,'' said Gary Thayer, senior economist at A.G. Edwards & Sons Inc.
The Conference Board said its expectations index, which attempts to measure consumers' level of confidence in the future, fell 5.9 to 108.6.
Consumers, however, felt confident about current economic conditions, with the board's present situation index rising 1.1 to 172.9.
''There are no signs of any significant downturn in optimism,'' said Lynn Franco, a Conference Board economist.
U.S. consumers are flush with cash given steady income growth, tax refunds and a resilient stock market.
In a separate report, and one that added to the evidence that prices aren't threatening to accelerate and touch off inflation, the Chicago purchasing managers reported that the index of prices paid by factories for materials fell to 48.7 in March from 55.5 in February. The report indicated more companies reported price declines than increases.
While it only measures activity in the Chicago area, investors watch the Chicago purchasing managers report because, in the past, it has followed the National Association of Purchasing Management's index, which measures conditions nationwide.
The NAPM report for March is scheduled for release this morning.
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BUSINESS SUMMARY
Confidence slips on pessimism
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