Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, December 1, 1993 TAG: 9312010020
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
The Conference Board, a private business research organization, said November's increase in its monthly consumer confidence index followed a sour reading the month before.
Results of the survey were welcomed by a range of economists, but all warned against reading too much into a one-month improvement.
The Conference Board said the index registered an unexpectedly strong gain of 11 points to 71.2, up from a revised 60.5 in October. Some economists expected only a 1 point gain.
Such a rise "has occurred only rarely in the 25-year history of this survey program," the Conference Board said.
The index, calculated on a 1985 base of 100, is the result of responses to questionnaires sent to 5,000 U.S. households, with questions ranging from home-buying plans to local job conditions.
It is considered a useful barometer of consumer spending, which accounts for two-thirds of the nation's economic activity.
"While the measure . . . chalked up an imposing gain in November, the present index reading is still at a level generally associated with a lackluster economy," said Fabian Linden, executive director of The Conference Board's consumer research center.
"However, the impressive magnitude of the November gain strongly suggests that better times may well be on the way," he said.
The optimistic readings were seen across the country, with the Pacific and New England regions reporting the sharpest gains. The South Atlantic region, which includes Virginia, reported an 86-point reading in November, up from 70.4 points in October and 72.7 points in November 1992.
Many economists had forecast a modest advance in consumer confidence based on improved retail sales and early reports of a good start for the Christmas shopping season. Linden said a survey conducted earlier this year found considerable pent-up demand by consumers, with 35 percent saying they had postponed a major purchase.
The November survey showed a sharp decline in the number of people who described business conditions as "bad." The proportion of people who hold this negative view is at the lowest level in about three years. In addition, the report showed an increasing number of consumers who think jobs are plentiful.
Irwin Kellner, chief economist at Chemical Bank in New York, cautioned that whatever optimism is out there may be short-lived.
"When people see what their tax liabilities are in the New Year, their moods will darken considerably," he said.
by CNB