U.S. consumer confidence slips

Journal Record, The (Oklahoma City), Mar 1, 2000

NEW YORK (AP) -- With interest rates and gas prices rising, consumer confidence slid in February from its record-setting January level.

But confidence still is strong, suggesting that consumer spending will continue to fuel U.S. economic growth.

The Conference Board said Tuesday its Consumer Confidence Index dipped to 141.8 in February from an all-time high of 144.7 in January.

It was the first decline since October, but the reading remained above December's 141.7.

The results were lower than the 143 that Wall Street analysts had expected, helping cool inflation jitters, but economists still expect the Federal Reserve to push interest rates higher in March to keep the economy from overheating.

Lynn Franco, director of the New York board's research center, said the February figures reflected declining consumer expectations of business and job opportunities in the next six months.

"Consumer attitudes will bear watching over the next few months to gauge the impact of rising interest rates and relatively high gas prices," she said. "As for now, the index is signaling further economic growth ahead."

The index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer spending makes up about two-thirds of the nation's economic activity.

Most analysts expect the economy to begin slowing some this quarter since Fed policy-makers have raised interest rates four times since June to try to slow the economy and head off inflation.

In addition, rapidly rising crude oil prices have sent heating oil prices soaring and gasoline costs surging to record levels, hitting fuel-reliant industries such as airlines and trucking -- as well as consumer pocketbooks.

The latest consumer confidence reading "may indicate a little bit of fear that higher gas costs are here for a while, maybe a little bit of fear about what the Fed might do and the stock market might do," said Bryan Jordan, an economic analyst at Banc One Investment Advisors in Columbus, Ohio.

But "consumers are still very confident," Jordan said. "They're still out there spending, even on autos and homes which are interest- rate sensitive."

Gary R. Thayer, chief economist at A.G. Edwards & Sons in St. Louis, said there appeared to be "modest cooling" but no signal of an economic downturn.

"I think consumers are a bit more cautious. But the economy is still pretty healthy, with good job growth and strong income levels," he said. "We won't see the economy falter, just some of the steam come off."

Both economists said they expect Fed policy-makers to raise interest rates again at their March 21 meeting.