Americans’ confidence in the economy rose in May for the third consecutive month, fed by growing optimism about job prospects. þþStill, economists worry that improvements in the mood of shoppers may be reversed amid huge declines on Wall Street and fears that a debt crisis in Europe could thwart global growth. þþThe Conference Board, based in New York, said Tuesday that its Consumer Confidence Index rose to 63.3 points, from a revised 57.7 points in April. Economists surveyed by Thomson Reuters had expected 59 points. þþThe increase was bolstered by consumers’ outlook over the next six months, one component of the index, which soared to 85.3 from 77.4, the highest since it reached 89.2 in August 2007, before the recession. þþThe other component of the index, which measures how shoppers feel now about the economy, rose to 30.2 from 28.2. þþThe index — which measures how consumers feel about business conditions, the job market and the next six months — has been recovering fitfully since hitting a record low of 25.3 in February 2009. þþA reading above 90 indicates the economy is on solid footing; above 100 signals strong growth. Economists watch the number closely because consumer spending, including spending on health care and other major items, accounts for about 70 percent of the nation’s economic activity. þþLynn Franco, director of the Conference Board Consumer Research Center, said on Tuesday that though confidence remained weak, it appeared “to be gaining some traction.” þþEconomists contend confidence will remain weak for at least another year because of stubbornly high unemployment. Employers are expected to add 425,000 jobs in May, up from 290,000 jobs in April, but economists project the unemployment rate will be 9.8 percent, down only slightly from 9.9 percent. The Labor Department is to release the monthly job figures June 4. þþAdding to the dark mood was a downbeat report from an important housing index. The Standard & Poor’s/Case-Shiller 20-city home price index, released Tuesday, fell 0.5 percent in March from February, a sign that the housing market remained weak even as mortgage rates were near historic lows. The expiration last month of the government’s home-buyer tax credit could hurt sales in the coming months. þþThe National Association of Realtors said Monday that sales of previously owned homes were the highest in five months and exceeded expectations. Buyers were rushing to meet a deadline for a tax credit. þþStores had a solid spring selling season, but May is turning out to be disappointing. þþThe Conference Board poll — based on a random survey of consumers sent to 5,000 households May 1-18 — includes volatile days in the stock market, but excludes the 376-point plunge in the Dow Jones industrial average last Thursday, the worst one-day drop in more than a year. þþ“We were starting to see some good signs that we were building momentum” in spending, the chief economist at Gallup, Dennis Jacobe, said. “This has put a wrench into the works. The momentum has come to a halt.” þþBased on Gallup’s poll of 1,000 shoppers a day, consumers’ outlook has deteriorated from April, Mr. Jacobe said. The percentage of consumers who predict the economy will worsen is 60 percent, up from 54 percent in April. þ
Sour ce: NY Times
