Apr 28, 2009

Consumer confidence soars in AprilBy Anne D'InnocenzioBoston.com

New York—Hopeful signs that the worst may be over for the economy boosted Americans’ moods in April, sending a closely watched barometer of sentiment to the highest level since November.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March. The reading marks the highest level since November’s 44.7 and well surpasses economists’ expectations for 29.5.

The consumer confidence survey showed a substantial improvement in consumers’ short-term outlook, including even their assessment of the job picture.

Some encouraging news in areas like retail sales and housing have helped fuel a recent stock rally. A housing index showed Tuesday that home prices dropped sharply in February, but for the first time in 25 months the decline was not a record — another sign the housing crisis could be bottoming. The Dow Jones industrial average rose 17.12 to 8,042.12 by midday as investors set aside worries about spread of swine flu and the viability of banks.

Improvements in the stock market have helped boost shoppers’ moods, said Gary Thayer, chief economist at Wachovia Securities, but major economic problems remain — and that means that confidence could bounce up and down for awhile, he said.

“We can’t say we have seen the bottom of the economy,” he said. “We still have some economic concerns that we have to work through.”

Economists closely monitor consumer sentiment because consumer spending accounts for more than two-thirds of economic activity.

The huge jump in confidence follows a small increase in March, following a freefall in February. Still, the index remains well below year-ago levels of 62.8.

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