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US Consumer Confidence Continues to Climb - 2002-01-29

Consumer confidence in the United States continued to climb in January for the second straight month, raising hopes the economy will start recovering from recession this year. The latest monthly survey was released Tuesday by the New York-based Conference Board, a private business research group. Consumer confidence rose to a four-month high, as Americans apparently see better economic times ahead. Conference Board economist Delos Smith says the most important news in the survey is in the expectations.

"You have improvements in employment. You looked at improvement in business conditions, which I think is key," he said. "Only income was down a little, people not thinking they will have increases. Durable goods was a good number, too. That's another sign."

Sales of durable goods, such as automobiles, were up about two percent in December, after slumping in November. Conference Board analysts point to that statistic as a sign that consumer spending, which accounts for two-thirds of the U.S. economy, is climbing back.

But many analysts still point to troubling spots in the economy, including another spike in unemployment. Robert Heller, a former member of the U.S. central bank, says he believes the economy will be scraping bottom for a while longer.

"Before we really get vigorous new economic growth, I think some time will pass because there is so much unutilized capacity," he said. "New investments will be short in coming. Furthermore, people have been scared because of the stock market losses they've been taking in the past. People are still re-shuffling portfolios. So, it will take a bit longer than usual probably, until the consumer is really back in there and until business is back in the investment picture."

The U.S. stock market has been as much on hold lately as the U.S. economy, although experts are hopeful for a rebound in both. Analysts say investors are surrounded by uncertainty, some of it more immediate. Economic policy priorities, from the Bush administration to the U.S. Congress, and the direction of short-term interest rates, are expected to guide activity on Wall Street in the near term.