What Drives Consumer Confidence? (and Viet Nam era college professors ready for retirement!)

NY Times ^ | August 22, 2004 | By JONATHAN FUERBRINGER

[fight_truth_decay]

With crude oil near $50 a barrel, consumer confidence could be in for a big hit. James E. Glassman, senior United States economist at J. P. Morgan, thinks otherwise.

"My gasoline station manager didn't know that the price of oil was near $50 a barrel," Mr. Glassman said. "He just knows what the oil company charges him for gasoline when the delivery truck pulls up each night." That price has been dropping.

The national average price of a gallon of midgrade gasoline reached $2.155 in May. It has since dropped to $1.97, according to the Department of Energy.

Consumer confidence had already been weakened by gasoline prices, Mr. Glassman said, and has actually recovered. "The good news is that this is probably already behind us," he said.

In May - the month of gasoline's recent price peak - the University of Michigan index of consumer sentiment dropped 4.2 percent, to 90.2, from 94.2 in April. It bounced back to 96.7 in July and then fell to 94 in the preliminary confidence report for August.

And the forecast is that the index will stay at that level when the final figure is reported on Friday, according to Bloomberg News.

But while oil and gasoline may not be major factors in setting consumer confidence right now, job growth may be, depending on the message consumers are receiving.

In May, the Conference Board's consumer confidence index, the other consumer barometer on which financial markets focus, was unchanged as a pickup in job growth offset the climb in gasoline prices, according to Lynn Franco, director of the Conference Board's research center.

By July, the Conference Board index had risen for four consecutive months and was at its highest since June 2002.

"The spring turnaround has been fueled by gains in employment, and unless the job market sours, consumer confidence should continue to post solid numbers," Ms. Franco said in the July news release.

So what did the consumer hear about jobs? That only 32,000 payroll jobs were created in July, as reported by the Labor Department? Or that 629,000 jobs were added, based on its household survey?

"Consumers paid attention to the weaker payroll report for July," said Richard T. Curtin, director of surveys of consumers at the University of Michigan. And that helped to drag down the consumer sentiment level in Michigan's preliminary confidence report for August.

[fight_truth_decay]

Nationally, VC investments increased 11 percent as 509 companies raised $5.1 billion, according to a report from VentureOne and Ernst & Young. Startup firm Calif.-based Force10 even looks to give Cisco a run for its money, reports Investor's Business Daily. California companies received nearly half of all venture capital investments.

A record nearly 69 percent of Americans now own their own home. More families own more homes with more equity than ever before. President Bush's American Dream Downpayment Act, passed by Congress and signed into law last year, will help about 40,000 families a year with their down-payment and closing costs.

The president has worked with Congress to partner with businesses and faith-based groups to create 5.5 million new minority homeowners by 2010. During the past 18 months, more than 1.5 million minority families have already made this dream a reality.

IBM Corp. has boosted the number of employees it plans to hire this year to 18,800, up 25 percent from a January prediction of 15,000. The company will finish 2004 with the number of jobs predicted in January: 330,000 reducing the number of jobs moving offshore to 2,000. Most of the new hires will be "seasoned" consultants (often falling under the household survey) well versed in finance, retailing and telecommunications

And you will be happy to hear the job with the second largest number of positions available(the first, RN's)will be college professors and instructors. Those hired during and after the Viet Nam war are ready for retirement, so jobs will need filling!!!!