Jan. 27 (Bloomberg) -- Consumer confidence this month may have risen to the highest in a year and a half as companies fired fewer workers and U.S. stocks gained value, according to a survey of economists in advance of today's report. The median forecast of 58 economists surveyed by Bloomberg News shows a reading of 98.5 in the Conference Board's index of consumer sentiment for January, up from 91.3 in December. Optimism hasn't been higher since June 2002, when the index reached 106.3. The business research group gives its survey results at 10 a.m. Washington time. Ethan Allen Interiors Inc., EBay Inc. and other companies are reporting an increase in customers and sales. The four-week moving average of initial jobless claims fell last week to the lowest in almost three years, showing corporations are retaining employees. The Standard & Poor's 500 Index gained 29 percent last year, the first annual increase since 1999.
``There is a tremendous outlook for the consumer in 2004,'' said Timothy Rogers, chief economist at Briefing.com, a Boston- based forecasting firm. ``Strong growth leads to more hiring, and more hiring leads to more income, which will help drive spending.'' The Conference Board bases its consumer confidence gauge on a survey of 5,000 households. Estimates in the survey for this month's index ranged from 89 to 107. The University of Michigan reported Jan. 16 that its preliminary index of consumer sentiment jumped to 103.2, the highest since 107.6 in November 2000. The preliminary reading was based on a survey of about 250 households. The final index, reflecting 500 households, may be 103 when reported Friday, based on the median of 37 estimates in a Bloomberg News survey of economists.
Ethan Allen
``With the improvement in consumer confidence, it's making people come back, make decisions, and we're benefiting from that,'' Ethan Allen Chief Executive Farooq Kathwari, said in a televised interview last week. Ethan Allen, a furniture maker and retailer based in Danbury, Connecticut, said last week that orders at its 121 company-owned stores rose 8.1 percent in its fiscal second quarter, which ended Dec. 31. EBay, the world's largest Internet auctioneer, had 54 percent more registered users in the final three months of last year than a year earlier. The company last week boosted its revenue forecast for this quarter to as much as $700 million. Consumer spending rose 0.4 percent in November, the Commerce Department said last month, and holiday-season sales of clothing, books, music, furniture and other general merchandise jumped 5.2 percent in November and December from a year earlier, the National Retail Federation says.
Gross Domestic Product, Jobs
The U.S. economy probably expanded at a 5 percent annualized rate in the final quarter of 2003 and is set to grow 4.4 percent this year, according to the median estimates of economists surveyed by Bloomberg News. The economy of 15 nations in the European Union expanded 0.8 percent last year while the U.S. economy grew 3.1 percent. Initial jobless claims fell 1,000 in the week ended Jan. 17 to 341,000, and the four-week moving average, a less volatile measure, declined to 344,500, the lowest since 336,500 in the week that ended Jan. 27, 2001. Federal Reserve studies have shown that confidence reports don't always predict changes in spending. Consumer confidence usually tracks the labor market, while spending is tied more to people's views of their future wealth, the studies have found. //www.bloomberg.com