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Business Title: Consumer Confidence in U.S. Holds Close to One-Year High Confidence among U.S. consumers in March held close to the highest level in a year, underpinned by an improving labor market. The Conference Board’s confidence index dropped to 70.2 from a revised 71.6 reading in February that was higher than initially reported, figures from the New York-based private research group showed today. The median forecast of economists surveyed by Bloomberg News called for a decrease to 70. The best six months of job growth since 2006, unemployment at a three-year low, and stock market gains are giving Americans the means to withstand higher fuel costs. A sustained improvement in moods may keep driving consumer spending, which accounts for about 70 percent of the economy. “It’s a tug of war -- the labor market versus gasoline prices,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities Inc. in New York. “We are close to that key psychological level of $4 a gallon. Assuming gas prices don’t shoot to the moon, consumers will keep spending.” A separate report today showed home prices in 20 U.S. cities dropped at a slower pace in January, pointing to stabilization in residential real estate. The S&P/Case-Shiller index of property values fell 3.8 percent from January 2011. Compared with December, home prices were little changed. Stocks were little changed after the figures, with the Standard & Poor’s 500 Index down less than 0.1 percent to 1,415.71 at 10:56 a.m. in New York. The yield on the benchmark 10-year Treasury note dropped to 2.2 percent from 2.25 percent late yesterday. Estimates for consumer confidence ranged from 66 to 77 in the Bloomberg survey of 79 economists after a previously reported 70.8 reading in February. The measure averaged 53.7 during the recession that ended in June 2009. The Conference Board’s measure of present conditions increased to 51 from 46.4 a month earlier. The gauge of expectations for the next six months fell to 83 from 88.4. The share of respondents who said this month that jobs were plentiful climbed to 9.4 percent, the highest since September 2008, from 7 percent. Payrolls grew by 227,000 in February, the third month of gains in excess of 200,000, Labor Department data show. The unemployment rate held at a three-year low of 8.3 percent following five consecutive declines. Worker pay jumped in the last six months of 2011 by the most in almost five years, according to data from the Commerce Department. The proportion expecting their incomes to rise over the next six months climbed to a three-month high of 15.8 percent from 15.5 percent. The number projecting better business conditions in the next six months increased to 19.2 percent in March, the highest since April 2011. Buying plans improved in March, today’s figures showed. More Americans said they expected to purchase cars, homes and major appliances in the next six months. Among other measures of confidence, the Bloomberg monthly expectations gauge climbed to a one-year high in March. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell this month to the lowest level this year. Stock market gains are providing some relief. The S&P 500 (SPX) climbed yesterday to the highest level since May 2008 and is up almost 13 percent so far this year through yesterday. At the same time, a gallon of regular unleaded gasoline has increased to a 10-month high of $3.90 as of yesterday, according to AAA, the nation’s largest automobile association. “You’ve got a mixed picture right now because the jobs news is actually positive but you do have the spikes in gasoline and food,” said Clarence Otis, chief executive officer of Darden Restaurants Inc. (DRI), in a March 23 conference call. The Orlando, Florida, operator reported a 2.3 percent increase in traffic at its Red Lobster, Olive Garden and LongHorn Steakhouse brands during the third quarter and expects a 2.5 percent to 3 percent increase in same-store sales this year.
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