BUREAU OF LABOR STATISTICS, DAILY REPORT, WEDNESDAY, FEBRUARY 27, 2002: Consumer confidence slipped this month after 2 months of gains, but it remains high enough to support "healthy consumer spending in the months ahead," the Conference Board said yesterday. The board, a New York-based research group, said its monthly confidence index fell to 94.1 this month from 97.8 in January. However, it was still well above its November low of 84.9. The two components of the index, consumers' assessment of current economic conditions and what they expect conditions to be 6 months from now, both fell (John M. Berry, The Washington Post, page E3).
Consumer confidence stumbled in February, falling 3.7 percentage points from last month to 94.8 percent, despite evidence that the economy has begun to recover (Daily Labor Report, page A-12). Consumer confidence fell this month as concerns about unemployment and the reliability of company earnings reports dimmed enthusiasm that has been building since September, a private research group said yesterday. The decline in the Conference Board gauge of sentiment was larger than expected. More than 80 percent of those surveyed indicated they were concerned about jobs. The confidence index sank to its lowest level in 7 and 1/2 years in November, as Americans were still reeling from the September terrorist attacks (Bloomberg News, The New York Times, page C12). Americans' anxiety about the jobs outlook helped pull down consumer confidence in February, suggesting continued volatility as the economy seeks to pull itself out of recession. In January, the jobless rate dipped to 5.6 percent, a 0.2 percentage point decrease from December, according to the Labor Department. But that occurred because the labor force shrank by 924,000, and economists think the rate will rise again as cautious companies delay rehiring laid-off workers February figures are to be released next week (Associated Press, http://www.chicagotribune.com/business/chi-0202270366feb27.story). Orders to U.S. factories for big-ticket goods rose a larger-than-expected 2.6 percent in January, suggesting the nation's battered manufacturing sector is edging toward a recovery. The solid advance in orders for durable goods -- costly manufactured items expected to last at least 3 years -- followed a 0.9 percent rise in December, the Commerce Department reported today. It was the third increase in the last 4 months. Many analysts had forecast a smaller, 1 percent rise in orders in January (Jeannine Aversa, Associated Press, http://www.nandotimes.com/business/story/271748p-2492211c.html). Industrial production fell in all regions in January, compared with a year earlier, but the rate of decline isn't nearly as steep as late last year, says The Wall Street Journal, page B7. Manufacturers are expected to boost production in the months ahead, because inventories are so low and retail sales are holding firm. Regions likely to stabilize first include those with a concentration of auto and related products such as steel and specialty textiles, including East South Central and Great Lakes states. But New England and western states, more dependent on technology products, especially telecommunications gear and semiconductors, are recovering slowly because of lackluster sales and high inventories. Particularly hard hit are smaller states with a dominant semiconductor sector. Consumer spending has held up beyond almost everyone's expectations, writes Louis Uchitelle in The New York Times, February 24, 2002, page 4, "Money & Business" section 3. Thanks to all the consumption, companies have run down their inventories of unsold goods to unusually low levels. Restocking is imminent, the forecasters say. The inflation rate is hardly noticeable -- price cutting has been widespread -- zero interest auto loans being only one example. Low interest rates have also encouraged spending. So have falling fuel prices. As rates fell, mortgage refinancing put billions of dollars into the pockets of home owners without raising their monthly payments. The problem is that none of these factors are likely to repeat themselves. And hourly wages, while still rising smartly in the fourth quarter, have begun to show signs of faltering as unemployment moves higher. "Wages are the last domino to fall," said Jared Bernstein, a labor economist at the Economic Policy Institute. "The progression is weak economic growth, rising unemployment, and then wages lose ground." Stephen S. Roach, chief economist at Morgan Stanley, expresses some doubt that the "day is saved". Says he: "The numbers have broken to the upside temporarily. But that has happened in past recessions only to give way to fresh hard times. Skepticism should not be suspended". If you're unemployed and looking for a job, you may have to be a little more patient: The average time needed to find work is rising. It was 3.4 months in the fourth quarter of last year, up from 2.2 months in the first half, according to a survey by Challenger, Gray & Christmas, an outplacement firm based in Chicago (The New York Times, February 24, page 13, "Money & Business" section 3). By June, an estimated 2 million Americans will exhaust their unemployment benefits. More than 1 million have already exhausted them, according to Amanda Paulson, Christian Science Monitor, http://www.nandotimes.com/business/story/269866p-2478789c.html). In past recessions, Congress has always come to the rescue, softening the hard knocks by extending unemployment insurance for 13 or 26 weeks. In the severe 1975-76 recession, it was extended by 39 weeks. Each week, 80,000 workers exhaust their unemployment benefits, according to the Center on Budget and Policy Priorities. Unemployment insurance is an employer-funded program started in 1935. Eligibility and benefits vary by state and depend on how long recipients have worked, how much they earned, and the reason they're out of a job. A worker who voluntarily quits isn't eligible, nor are independent contractors or the self-employed. Typically benefits are 50 percent of former wages, up to a certain maximum. The Commerce Department says new home sales fell 14.8 percent to a seasonally adjusted annual rate of 823,000. That's the lowest level since June 2000. Economists had been looking for a new level of 950,000. At the same time, the government revised its reports for both November and December new home sales to show higher levels than previously reported. The January decline, nonetheless, was the largest since January 1994. The downturn comes in sharp contrast to recent evidence pointing to exceptionally strong activity in the housing sector (The Associated Press, http://www.usatoday.com/aponline/2002022710/2002022710225300.htm). DUE OUT TOMORROW: Mass Layoffs in January 2002
<<application/ms-tnef>>
