Consumer Confidence Exceeds Expectations

    January 25, 2005

The U.S. consumer confidence index unexpectedly rose for the second month in a row to a six-month high.

“Consumer spending has been stellar for the past two quarters, so that these levels of consumer optimism are evidently consistent with robust demand,” stated Stephen Stanley, chief economist at RBS Greenwich Capital.

US economist, Marie-Pierre Ripert says that the report was better than expectations.

“This difference can be explained by the fact that consumer confidence from the conference Board is much more sensitive to job market trends than UM index,” she said.

The latest report “suggests that the (monthly) employment report is likely to be quite positive in January,” she added.

“However, households are much less confident about the future: less tax cuts and the rise in interest rates are likely to weigh on their financial situation — we still expect private consumption to slow down even if it could take more time than previously expected.”

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