WASHINGTON -- Consumers continue to exude strong confidence about their near- and long-term economic situations, according to polling by the Conference Board, based in New York.
Consumer confidence is now riding a seven-year high, the results show.
However, the positive outlook hasn't necessarily translated into greater spending levels, as consumers continue to look for bargains.
Recent momentum has lifted the Consumer Confidence Index to its pre-recession levels of the late '80s, depositing it at about 118.5 in March, or 20 points above the index's year-ago figure.
"Overall, the basic trend has been a positive one," said Lynn Franco, associate director of the Conference Board's Consumer Research Center, which measures the Consumer Confidence Index by polling 5,000 households each month.
That positive trend has boosted various components of the overall index, such as the Present Situation Index, which measures current consumer perspectives. In February, for instance, that component saw its best month in 27 years, rising to 144.3 points, compared with 110.8 a year ago. There was only a slight dip in March, of 0.2 points to 144.1.
Consumers are also more confident about the future, according to another gauge.
The Expectations Index rose, with some fluctuations during the year, to 101.7 points in February from only 89.5 a year ago. That index held approximately steady in March, at 101.4.
"People are happy," said Sandra Shaber, an economist with the WEFA Group, a think-tank organization located in Philadelphia. "They're happy about everything."
In its poll of current and future business expectations, the board found more mixed results. For example, the number of consumers who labeled current conditions "good" rose modestly in March, from 29.1% in February to 29.4%. But those who reported that conditions were "bad" also increased in March, from 12.5% in February to 13.2%.
Consumers remained positive about current job prospects in March, with 33.1% saying jobs are plentiful, as compared with 32.5% in February. The rate of people saying that jobs are hard to get edged to 18.6% in March, up from 18.5% in February, which was a 30-year low.
Looking to the next six months, consumers expecting business conditions to improve dipped from 15.7% in February to 15.5% in March. Those predicting conditions to worsen also declined in number, however, from 6.6% in February to 5.8% in March. The rate of consumers saying jobs will be more plentiful in six months held at 13.9%, while those expecting jobs to be harder to find increased from 13.9% in February to 14.8% in March.
"It's been a pretty strong year," Franco said. "It's been gathering momentum; even though it has had its normal fluctuations, there's nothing to indicate that it's going to lose that power."
Not everyone agrees, however. Shaber, for one, is not as optimistic as Franco about the upcoming year: "Consumer spending was really in the doldrums last summer," Shaber said. "It was really bad for nearly every industry. And I have this feeling that it's going to soften again."
As in the past year, high consumer confidence and a stable economy may not translate into consumer spending. According to the Conference Board, consumers' plans to make major purchases -- from cars to appliances -- have remained almost fixed throughout the year. For example, the index of consumers planning to buy a new refrigerator held at 4.7% in February compared with a year ago, while the rate of those planning for a new washing machine dropped slightly from 4.2% in February 1996 to 3.7% last month.
Such spending habits have led many hard-goods stores to shrink profit margins just to attract shoppers. However, observers say that some supermarkets appear to be taking an opposite tack.
"The whole new trend for supermarkets is a move upscale," said Shaber. It's a move, she said, that has allowed upscale and specialty food shops to compete successfully with low-price supermarkets by offering choices and services not available at discount chains.
Franco, however, said that while the Conference Board expects the economy to travel in cycles, the downhill slope is not on the map quite yet. With the current combination of low inflation, employment strength and wage growth, the board predicts consumer confidence is going to continue with "good to moderate growth."
"There doesn't seem to be anything out there signifying that the economy is going to retreat," Franco said. "We don't expect anything significant to happen."
