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Tuesday, 28 December, 1999, 17:09 GMT
US confidence at 31 year high

US consumer confidence is boosting spending Consumer confidence fuels spending in shops

America's booming economy has helped push consumer confidence to its highest levels since 1968.

With unemployment continuing to fall and inflation remaining low the feeling is that the good times will continue to roll.

Consumers are in very good spirits as the 20th century comes to a close
Lynn Franco, Conference Board
The news helped send shares to fresh records in late Tuesday morning trading. The benchmark Dow Jones index was up 88 points to 11,478 and the technology heavy Nasdaq was up 29 points, to go back through the 4,000 barrier it flirted with last week.

Both indexes would set fresh record closing levels if they maintain their gains through the afternoon session.

The Conference Board's monthly survey of 5,000 households recorded a consumer confidence rating of 141.4 in December, the second-highest reading since the business-financed study group began keeping records 32 years ago.

It has only been exceeded by the reading of 142.3 in October 1968.

Analysts were wrong-footed by the upbeat mood - they had predicted that the index would dip to 135 in December from a revised 137 in November.

Two thirds of activity

The result suggests that the economic expansion which began in March 1991 should continue into March and become the longest in US history, surpassing the 106-month expansion of the 1960s.

"Consumers are in very good spirits as the 20th century comes to a close," said Lynn Franco, research director of the business-financed research group.

"Healthy paychecks, continued low inflation and continued job opportunities will keep the economic expansion on its record-breaking course," she added.

Consumer spending accounts for about two-thirds of the US's total economic activity.

The high reading, suggesting that consumer spending will continue at robust levels, could rekindle fears that interest rates may have to rise again to protect against any inflation increase.

At its meeting a week ago, the US central bank, the Federal Reserve, decided to postpone any rate rises until after any year 2000 computer problems had been dealt with.

The Conference Board report also said consumers were more optimistic about future business prospects.

Just under a fifth expect business conditions to improve in the next six months, with just one in twenty expecting conditions to worsen. The rest said they expected no change.

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See also:
22 Dec 99 |  Business
Shares, US economy smash records
07 Jun 99 |  The Economy
World's bankers warning on US economy
08 Dec 99 |  Business
Reassuring signs on US economy
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