Consumer confidence is neither easily understood nor well-behaved, but it may be the winch that hoists this economy from the depths of recession. That's the news from the latest Federal Reserve surveys of the local and national economic pulse. That reading was further bolstered this week: On Friday the government said its index of leading indicators climbed by 1.1 percent in February, it's first gain in since last June and the strongest jump in more than 2 1/2 years. This followed news on Wednesday that 4th quarter GNP numbers were better than previously thought.
Sluggish income growth and unemployment remain big concerns, but a growing contingent of government and private economists see hints of a rebound. A chief reason for this seems to be the end of the gulf war and its effect on consumer and business confidence. Last summer's Iraqi invasion of Kuwait simultaneously drove up oil prices while driving down consumer and business spending. The end of the conflict has not only returned oil prices back to prewar levels, but seems to be contributing to a decided uptick in confidence.
A survey of Maryland manufacturers conducted by the Federal Reserve Bank of Richmond suggests that the state's manufacturing vital signs have stabilized. The same trend is apparent in retail sales, real estate, tourism and the financial markets, though activity in these areas remains weak. Businesses, nonetheless, reported being "decidedly more optimistic about the economic outlook."