Americans are optimistic, despite the economy’s stresses

David Goldman/Associated Press
The good economic news includes lower unemployment and higher stock prices, but the price of gasoline continues to be a potential threat. The US average is about $3.90 per gallon.

NEW YORK - Americans are holding a rosier view of the US economy as they focus on the good in a flood of mixed economic news.

Gasoline prices are up, but the stock market is, too. Home prices are down, but so is unemployment.

“The resilience suggests that jobs remain a more important concern for consumers than gasoline prices,’’ said Mark Vitner, an economist at Wells Fargo Securities.


Gas prices have risen almost every day this month, yet the Consumer Confidence Index for March held nearly steady at 70.2, according to the Conference Board, the New York private research group that produces the survey. February’s reading, revised upward to 71.6, was the highest it had been in a year.

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Consumer confidence is widely watched because consumer spending accounts for about 70 percent of US economic activity. Confidence has been fragile since the recession began in late 2007, despite several short-lived spikes.

Now, it appears to be rebounding and Americans seem to be looking at the proverbial glass as half-full, despite continued weaknesses in the economy.

The confidence measure is still significantly below the 90 reading that indicates a healthy economy - a level the index has not been near since the recession in the United States began in December 2007. But the current reading shows a long climb from the 40 figure in October, not to mention a record low of 25.3 in February 2009.

Confidence levels are closer to a stable economy than not, with Americans feeling more confident than they have in a long time.


Nicklas Johnson, a software engineer who has been with the same company for 14 years, said recruiters are starting to solicit him for jobs. That is making him more confident about spending a little more money, despite the fact that gas prices are rising and the value of his home has plummeted.

“I would be lying if I said gas prices aren’t in the back of my mind,’’ said the 36-year-old, who lives in San Mateo, Calif. “But I’m very optimistic that employment is rising. . . . I’m more encouraged about improvements in the job market than discouraged about inflation.’’

Johnson is like many Americans, who are more upbeat as the job picture improves. The economy added an average of 245,000 jobs per month from December through February. And the unemployment rate has declined to 8.3 percent, the lowest in three years.

Adding to that, the stock market has risen at a healthy pace this year, making many Americans wealthier than they have been in the past few years.

But there are reasons for Americans to temper their optimism. The end of last year was the best for home sales in five years, but a continuing decline in prices suggests the housing market remains weak.


The widely watched S&P/Case-Shiller home-price index, released Tuesday, showed that home prices fell in January for a fifth straight month in 16 of 19 major US cities; modest sales increases have yet to boost prices.

The biggest threat to consumer confidence is still gas prices. The national average was $3.74 a gallon at the start of March, up from $3.52 on Feb. 15.

And there is more pain on the horizon. Typically, gas prices climb in the weeks leading up to Memorial Day.

Chris Christopher, senior principal economist at IHS Global Insight, expects prices to peak at $4.20 per gallon around Memorial Day and then start to decline in September.