Washington, March 25 (Bloomberg) -- U.S. consumer confidence fell this month to the lowest in almost a decade as the job market weakened and gasoline prices surged before the war with Iraq, economists said they expect a private group to say. The Conference Board, a New York research group, will probably report a reading of 62 in its consumer confidence index, down from 64 in February, a survey of economists found. The decline would be the fourth straight and would put the index at the lowest since 60.5 in October 1993, when the U.S. was struggling to emerge from the 1990-1991 recession. A further decline in confidence would add to evidence that the economy lost speed during the buildup to war. Sentiment will probably recover after crude oil prices plunged by almost 25 percent on speculation the Iraq war would end quickly, economists said. That may support growth because confidence is linked to consumer spending, which accounts for two-thirds of the economy.
March was ``probably the low point for confidence,'' said Stuart Hoffman, an economist at PNC Financial Services Group Inc. in Pittsburgh. ``You still have some problems with the economy aside from Iraq, but it looks like we'll do noticeably better in the second half of the year.'' The Conference Board is to issue its report at 10 a.m. Washington time. The estimate of the reading is based on the median of 55 forecasts in a Bloomberg News survey of economists. Estimates ranged from 56 to 70.
Snapshot Before the War
The survey will reflect responses received through March 18, according to the group's economist, Lynn Franco. That means the report will be a snapshot of consumer attitudes in the days before the war with Iraq began March 19. A separate report today will probably show that U.S. home re- sales in February posted the biggest drop in seven months, reflecting winter weather, anxiety about war and a weak job market. Sales of previously owned houses probably declined 4.8 percent last month, the most since 8.8 percent in June, to an annual rate of 5.8 million, a survey of economists found. Sales in January reached a record rate of 6.09 million, according to the National Association of Realtors, which issues the report at 10 a.m. Washington time. Economists say the outlook for the economy hinges on whether the war ends quickly, with little damage to Iraqi oil fields and few casualties. So far, economists are sticking with forecasts that growth will rebound to 3 percent or more at an annual rate in the second half of 2003.
`Pent-Up Activity'
``If this cloud is removed from the horizon, there is a great deal of pent-up activity that would move forward quickly,'' said Carl Tannenbaum, chief economist at ABN Amro Inc.'s LaSalle Bank in Chicago. He projects growth rates of 3.5 percent for the third quarter and 4.2 percent for the fourth, based on assumptions that the war will be over by June. The economy stumbled in the buildup to military action. Manufacturing slowed. Weekly claims for jobless benefits held above 400,000 for five straight weeks through mid-March. Economists consider claims above 400,000 a sign that unemployment, which was 5.8 percent in February, is headed higher. The average price of gasoline at the pump reached a record $1.77 a gallon in the week that ended March 17, a third straight record, Energy Department figures showed. Rising energy costs mean that consumers have less money to spend on other goods and services. Prices may drop should the U.S. and the U.K. make more progress in the war without casualties. Crude oil for April delivery closed at $26.91 a barrel on the New York Mercantile Exchange Friday, down from a 12-year high of $37.83 March 12.
An expected recovery in confidence means that many economists are willing to look past the weakness in the economy over the past two months, saying that uncertainty about the timing of war has lifted, which may free executives to hire and invest in new equipment. ``We look for a pretty sharp upturn in growth,'' said Ken Matheny, an economist at Macroeconomic Advisors LLC in St. Louis, who is projecting a growth rate of 4 percent to 4.5 percent in the second half. ``Consumer confidence will be rebounding in a way that would mean an upshift in the growth of consumer spending.'' //www.quote.bloomberg.com/