War's end buoys consumer confidence March leap a record for 24-year-old index WAR IN THE GULF


Consumer confidence took its largest one-month leap in more than 20 years this month, suggesting a rosy outlook for the future, a survey for one of the nation's leading business organizations showed yesterday.

But that does not mean that the typical consumer is rushing off to spend money and refloat the nation's economy, according to analysts.

While economy watchers are eager to seize on optimistic reports, they cautioned that the end of the six-week war in the Persian Gulf on Feb. 27 might have injected too much optimism into the Conference Board's index.

"You have a tremendous euphoria factor," said Fabian Linden, an economist for the Conference Board, a private research group. The war "had a happy ending. It was mercifully brief."

The board's index surged to 81 in March, up from 59.4 in February, for the biggest one-month gain in the survey's 24-year history. But it was down from 110.6 in March 1990.

The surge measures consumer expectations about the coming months. Consumers expressing optimism about their present situations actually declined from February. "When you get down to the real nitty gritty about what is happening at the moment, people feel pretty insecure about their jobs," Mr. Linden said.

Indeed, orders for "big ticket" manufactured goods, everything from appliances to airplanes, fell 0.3 percent in February, the nTC third setback in the last four months, the Commerce Department said.

Consumer spending accounts for about two-thirds of the nation's total economic activity, so any turnaround in consumer confidence is significant. However, economists for some time have said not to expect the spending to be the engine that pulls the nation out of the recession.

"If people are feeling better about themselves and better about the economy, they're going to go out and make some of these fairly risky purchases," Robert A. Dye, an economist with the Wefa Group in Bala Cynwyd, Pa., said. Of the latest positive confidence measures, Mr. Dye noted: "People are not necessarily feeling that much better today, but they're expecting to be better six months from now." The Wefa Group expects a turnaround sometime between April and June.

A potential roadblock to a recovery could be a spreading recession in Europe. Already, Britain, Spain, Sweden, Switzerland, France and Italy are in recession, as is Canada, Mr. Dye said. Germany is close to one, if it is not in one already, he added. A slowdown in their economies translates into a drop in U.S. exports.

Albert E. Sindlinger, an analyst who has been following consumer confidence since the Depression, warns against reading too much into reports of consumer optimism.

"They're echoing what people read and hear. And you can't forecast the future on what people read and hear," said Mr. Sindlinger of Sindlinger & Co. Inc. in Wallingford, Pa.

"Everybody's comparing this with past recessions. This isn't like any past recession," Mr. Sindlinger said.

He says that in most recessions, wage earners are hurt but salaried workers tend to keep their jobs and enjoy lower inflation that comes from a downturn. This time, all workers are feeling the pinch.

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