Confidence rises, as do big orders 2 reports point to new strength

November 25, 1992|By Los Angeles Times

Suggesting that the economy may be showing fresh signs of life, consumer confidence surged after the presidential election, while orders for big-ticket items posted their biggest rise in 15 months, according to two economic reports released yesterday.

The Conference Board, a business research organization, said that its consumer confidence index rose 11 points, to 65.5, from a revised 54.6 in October.

Meanwhile, orders to factories for durable goods -- those intended to last at least three years, like cars and appliances -- totaled a seasonally adjusted $124.4 billion in October, 3.9 percent more than in September and the biggest gain in more than a year, the Commerce Department said.

Economists and political leaders have been seeking signs of an improvement in consumer confidence -- particularly as the critical Christmas shopping season approaches -- because consumer spending accounts for about two-thirds of the nation's economic activity.

In anticipation of more consumer spending, investors drove up stock prices on Wall Street, where the Dow Jones industrial average jumped 25.66 points, to 3,248.70.

Economists said, however, that the latest news was not strong enough to suggest that a robust recovery is at hand. The confidence level of consumers is still below that of this past spring. And the gain in durable-goods orders was concentrated in aircraft and automobiles.

In addition, recession in California and the Northeast is dragging down the national recovery, the Federal Reserve Bank of San Francisco said in a report issued yesterday. The report said that the United States has technically been in an economic recovery for 18 months. But the recovery is weak compared with the previous six recoveries, and activity varies greatly among regions.

Still, the jump in confidence pointed to rising demand and activity after months of lackluster spending in shopping malls, real estate offices and auto dealerships.

"People are optimistic about a change in administration, even though it doesn't put money in their pockets," said Cynthia Latta, a senior economist for DRI-McGraw Hill, a Lexington, Mass.-based consulting firm. "But it's clear that the recovery is gaining a little more momentum, and people are sensing that."

"We rarely get a jump of this magnitude," added Fabian Linden, executive director of the Conference Board's Consumer Research Center, which conducts the widely watched survey of 5,000 households. "People are a good deal more optimistic about the future. But we still have a long way to go in this recovery."

The New York Times News Service contributed to this article.

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