Washington, March 27 (Bloomberg) -- Consumer confidence in theU.S. economy probably dropped in March to the lowest point in almostfive years as falling stocks and job cuts dampened optimism, analystssaid in advance of today's report. The Conference Board's index of consumer confidence probably fell to105 during the month from 106.8 in February, according to the medianof 44 forecasts in a Bloomberg News survey. March's reading would bethe lowest since June 1996, when it was 100.1. ``Rising layoffs and plunging equity markets are likely to exact afurther toll on measures of consumers' economic attitudes,'' said SteveWood, chief economist at FinancialOxygen Inc. in Walnut Creek,California. If the forecasts prove correct, March would mark the sixth straightmonthly decline, the longest such string since July 1991- February1992, when the economy was emerging from recession. TheConference Board is scheduled to release its report at 10 a.m.Washington time. Also today, the Commerce Department is expected to report that neworders at U.S. factories for durable goods rose last month afterplunging in January. The probable increase of 0.5 percent in demandfor such products as automobiles, appliances and computer chipswould follow January's 6.5 percent drop, analysts said. ``The headline reading is expected to stabilize following the sizeabledecline seen in January, when aircraft bookings registered a sharpdrop from a very elevated level,'' according to a forecast by DavidGreenlaw, an economist at Morgan Stanley Dean Witter in New York. Excluding transportation equipment, orders probably fell 0.2 percentlast month, analysts said. Durable goods are typically expensiveproducts made to last three or more years. The government's report ondurable goods orders is due at 8:30 a.m. Washington time.
Federal Reserve
Federal Reserve policy makers have expressed concern that decliningoptimism will be a drag on consumer spending, which accounts forabout two-thirds of the economy. Earlier this month, Dallas Fed Bank President Robert McTeer saidpersonal income and employment have been ``good'' in recent months,though ``it's hard to believe that if consumer confidence keeps goingdown, that consumer spending will hold up.'' Fed Chairman Alan Greenspan also warned that a sudden burst ofpessimism can bring on recession. ``When consumers become lesssecure in their jobs and finances, they retrench as well,'' Greenspansaid in recent testimony before Congress. ``It is difficult for economicpolicy to deal with the abruptness of a break in confidence.''
Rate Reduction
Fed policy makers lowered their target interest rate for overnight loansbetween banks by a half point to 5 percent on March 20, the third suchreduction this year, to guard against further economic weakness. Inthe fourth quarter, the economy expanded at a 1.1 percent annual rate,the slowest in 5 1/2 years. Many companies, particularly manufacturers, have responded to theeconomic slowdown by firing workers. Procter & Gamble, the largestU.S. household-products maker, announced last week it plans toeliminate 9,600 jobs, or 9 percent of its workforce, to reduce costs.About 40 percent of the job cuts will be in the U.S. Oracle, the second-biggest independent software maker, said Tuesdayit would eliminate almost 900 jobs because it is selling fewer products. First-time claims for state unemployment benefits are averaging350,400 a week so far this year, compared with 302,500 for all of lastyear and the most since 351,000 in 1996, Labor Department statisticsshow. Concerns that the slowing economy will trim corporate profits havepressured stocks. After rising to a high this year of 2859.15 on Jan 24,the Nasdaq Composite Index has declined. For the year, the index hasfallen 22 percent, after slumping 39 percent last year.