Consumer Sentiment Brightens Upbeat Mood, Brisk Home Sales Suggest Continued Good Times

Unfazed by turmoil in global financial markets, consumers’ confidence in the healthy U.S. economy surged in November and home sales reached record levels last month.

The Conference Board reported Tuesday its index of consumer confidence surged to 128.3 this month from 123.4 in October. The figure was well above Wall Street’s expectations for the month and not far off the 28-year high of 130.2 reached in September.

Separately, the National Association of Realtors reported sales of previously owned homes rose 1.2 percent to 4.40 million units in October, the highest level since the group began tracking sales in 1968.

“There were a lot of things in the last month that could have set consumers back,” said Dan Seto, an economist at Nikko Securities International Co. “But these figures prove that they didn’t lose their confidence at all and feel secure with the U.S. economy.”

Since mid-October, financial troubles have swept through Asia, battering the region’s currency and stock markets and adding an element of nervousness to global equity trading.

The Dow Jones industrial average plunged about 900 points over four days in October, culminating with a 554-point fall on Oct. 27 - its biggest point drop ever.

It has since recovered two-thirds of its 900-point drop. Stock and bond prices were slightly higher Tuesday, with investors ignoring any inflationary concerns raised by the reports.

Consumers have apparently shrugged off the turbulence in financial markets. In fact, The Conference Board’s present situation index, designed to measure consumers’ current outlook, surged in November from 147.5 to 158.9, its highest level since 1969.

The expectation’s index, which attempts to measure consumers’ level of confidence in the future, also rose in November to 107.9 from 107.3.

Consumer sentiment is important because consumer spending accounts for two-thirds of the nation’s overall economic activity.

“Recent turmoil on Wall Street and in worldwide financial markets, along with continuing layoff announcements, have not dampened consumer confidence,” said Lynn Franco, the associate director of the Conference Board’s consumer research center.

The consumer confidence index, calculated from a 1985 base of 100, is derived from responses to questions sent to 5,000 households nationwide. The survey polls consumers on matters ranging from job availability to home-buying plans.

Consumers said jobs were more plentiful in November and fewer said they had trouble finding employment from a month ago. Consumers also were more confident about current business conditions than they were in October.

More consumers also expected their incomes to rise in the future.

MEMO: This sidebar appeared with the story: JAPANESE BANK FAILS Tokuyo City Bank, a small regional bank weighed down by bad loans and mounting losses, conceded failure, becoming the fourth Japanese financial company to go under this month, Nikkei English News reported. The report, which cited unnamed sources, comes amid speculation that other financial institutions will collapse as Japan prepares to deregulate its financial markets. -Bloomberg News