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Tuesday, May 25, 1999 Published at 15:29 GMT 16:29 UK

Business: The Economy

US consumers think positive

US shopping malls are happy places as consumers want to spend

US consumers are growing more confident about the economy - and are planning to spend even more money.

The latest survey of 5,000 households by the Conference Board, a US business group, shows that low prices and few worries about unemployment are keeping consumers happy.

"Neither the crisis in Kosovo nor recent price surges at the gas pump have cooled consumer optimism," said Lynn Franco, of the Board's Consumer Research Centre.

She added that "low inflation and a strong job market are providing a durable foundation for historically high levels of consumer confidence."

The main index of consumer confidence rose to 135.8 in May from 135.5 in April. It was the seventh straight increase, and "the longest uptrend in the 32 year history of the survey", according to the Board.

Rebound since last summer

The index has recovered sharply since the autumn when the Russian default threatened a world financial meltdown.

Currently only one in eight US households believe jobs are hard to find, while one in four believed their incomes would rise.

Optimism about current business conditions is even stronger, with 44% believing them to be good, as opposed to only 8% who say they are poor.

"Unemployment is low, those who want to work can. Wages are rising faster than inflation, so consumers are getting ahead," said Gary Thayer, chief economist at A.G. Edwards and Sons.

Slowdown needed

Consumer spending makes up two-thirds of the US economy, and the survey evidence suggests that it will continue to soar.

That could worry the US central bank, the Federal Reserve, which recently declared itself on inflation alert, saying it would raise interest rates if necessary.

The US economic boom has helped keep the rest of the world out of recession. However, this in turn is sucking in imports, triggering a burgeoning trade deficit.

In the last three months, the United States has had the highest growth rate among the world's big industrial countries, with Gross Domestic Product - the total output of an economy - growing at an annual rate of 4.5%.

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