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Business Title: Confidence Among U.S. Consumers Is Unchanged This Month in Reuters/University of Michigan Index March 26 (Bloomberg) -- Confidence among U.S. consumers was higher than anticipated in March as companies slowed the pace of job cuts and stocks advanced. The Reuters/University of Michigan final consumer sentiment index for this month held at 73.6. The preliminary reading for the measure, released March 12, was 72.5. Economists forecast the final gauge would fall to 73, according to the median estimate in a Bloomberg News survey. Gains in confidence and fewer job losses may help sustain consumer spending and fuel the economy in coming months. A pickup in Americans’ purchases, which account for about 70 percent of the economy, hinges on employment growth that has yet to materialize. “The economy just continues to gain traction,” said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York. “We’re slowly trudging ahead. You are going to see further gains in spending in the first half but you are more likely to see broader improvement as the job situation improves.” Stocks extended gains and Treasury securities were little changed after the report. The Standard & Poor’s 500 Index increased 0.6 percent to 1,172.3 at 10:20 a.m. in New York. The yield on the 10-year Treasury note held at 3.88 percent. The economy expanded at a 5.6 percent annual rate in the final three months of 2009, led by inventory restocking, according to Commerce Department figures released earlier today. Consumer spending increased 1.6 percent at an annual pace, the final revision to gross domestic product showed. Estimates of 64 economists for the final March reading ranged from 71 to 75. Current Conditions A measure of current conditions, which reflects Americans’ perceptions of their own finances, rose to 82.4, the highest in two years, from 81.8 in February. The preliminary measure was 80.8. The index of expectations six months from now, which projects the direction of consumer spending, fell to 67.9 from 68.4 a month earlier. The preliminary March reading was 67.2. The consumer sentiment index averaged 66.3 in 2009, compared with 63.8 the previous year. The measure is still less than the average 88.8 during the expansion from late 2001 until December 2007, according to Bloomberg data. Consumer spending probably will grow 2.1 percent this year, slower than the 3.3 percent average of the 20 years before the start of the recession in December 2007, according to a Bloomberg survey of economists taken earlier this month. Higher Stocks Higher stock prices and a decline in jobless claims may have boosted the confidence index from its preliminary reading. The S&P 500 increased 5.5 percent since the end of February through yesterday. Initial jobless claims declined in three of the past four weeks. While employers have slowed the pace of job cuts, they’ve been tentative about hiring, restraining incomes. Federal Reserve Chairman Ben S. Bernanke, citing “weak” labor and housing markets, said yesterday the world’s largest economy still needs low interest rates to spur growth. Bernanke and his fellow central bankers last week signaled the U.S. recovery isn’t strong enough to stoke inflation or reduce unemployment quickly. While the economy has “continued to strengthen,” Fed policy makers said in a statement after their March 16 meeting that “employers remain reluctant to add to payrolls.” Inflation Expectations Consumers in the Michigan survey said they expect an inflation rate of 2.7 percent over the next 12 months, the same as in February. Over the next five years, the figure tracked by central bankers, Americans expected a 2.7 percent rate of inflation, also matching the February reading. Home Depot Inc., the largest U.S. home-improvement retailer, has cut prices on flowers and shrubs, fertilizer, lawn equipment and outdoor furniture to help meet its goal of increasing annual sales for the first time in five years. “Things are still difficult out there for customers,” Craig Menear, executive vice president of merchandising, said in an interview on March 18.
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