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09/25 00:01
Bloomberg Consumer Confidence Index Rose After Sept. 11 Attacks
By Brendan Murray
Washington, Sept. 25 (Bloomberg) -- Consumer confidence in the economy rose
this month to the highest level since January, according to a Bloomberg News
poll taken after the worst terrorist violence in U.S. history.
Bloomberg's confidence index, derived from a series of questions about the
economy, rose to 86.68 this month from 83.8 in a June survey, a survey of
1,200 adults found. The increase was the second in a row. The last time the
index was higher was when it was 89.3 in January.
``The American people are angry, grieving and upset, but they haven't lost
faith in the economy,'' said Evans Witt, president of Princeton Survey
Research Associates, which conducted the poll last week.
Americans expect stocks will rise and a majority predicted their personal
finances will stay the same or improve in the next year, the survey found. A
jump in President George W. Bush's approval rating to 83 percent from 55
percent last month shows that Americans favor his handling of the crisis.
Still, 70 percent think there will be more terrorist assaults within a year,
and a third think those that occurred Sept. 11 will very likely do serious
harm to the economy.
Half of the respondents said it's a good time to buy stocks, according to the
survey, taken the same week the Dow Jones Industrial Average suffered its
steepest decline in almost 70 years. Forty-five percent had given that
response in June, and 40 percent in April.
With eight cuts in interest rates by Federal Reserve policy makers this year,
almost two-thirds of the respondents said it's a good time to buy a house.
`Still Confident'
``I'm spending just as much as I did two weeks ago,'' said Lila Stangeland,
34, mother of two in South Brunswick, New Jersey. She and her husband, Glen
Marchese, 35, recently bought a house, and they plan to spend about $12,000
to $15,000 on furnishings and landscaping during the next few months. ``So
far we are still confident that we'll get a paycheck and spend like we do.''
Stangeland gave another reason for carrying on after the attacks. ``Stopping
our lives is just going to hurt the economy,'' she said.
The poll, which was taken in telephone interviews from Sept. 18 to Sept. 23,
has a margin of error of plus or minus 3 percentage points. The survey is
taken every six weeks, and the confidence index is computed quarterly.
Residents of New York were excluded from this survey, since people in
disaster areas typically don't respond. The survey was intended to take a
national rather than regional approach.
The attacks two weeks ago, which left more than 6,000 men, women and children
missing and presumed dead, have raised concern among economists that the U.S.
economy, already weakening, would slide into its first recession in a decade.
`You Can't Panic'
Even so, consumers have become more optimistic about their portfolios.
Fifty-five percent of those polled said they expect the Dow will be higher a
year from now, up from 35 percent in the June survey, according to the poll.
``It's frightening when you see your net worth drop,'' said Sara Baxter, 37,
shopping Friday at a Target Corp. store in Colma, California. Still, ``You
can't panic.''
She and her husband run a business doing pre-employment background checks
``which is going to be even hotter now.''
Fed Chairman Alan Greenspan told Congress last week that ``economic activity
ground to a halt'' in the week after hijackers crashed planes into the World
Trade Center towers in New York and the Pentagon near Washington. He said the
outlook remains strong for growth in the longer term.
The poll showed the attacks widened the gulf between those who said the
economy is set to improve and those who said it will worsen. Thirty-eight
percent expect the economy will get better in the next 12 months, compared
with 35 percent in an August survey. Thirty-two percent of the respondents
expect the economy will deteriorate in the next year, up from 20 percent in
August, the poll found.
Personal Finances
When asked about the outlook for their own personal finances, 88 percent of
the respondents expect no change or an improvement during the next year, down
from 93 percent in the June survey, the poll found.
While three-quarters of the respondents said they haven't bought extra
groceries or household supplies since the attacks, only 10 percent said they
canceled travel plans and 5 percent said they delayed a major purchase, the
poll found. Almost two-thirds said they've given money to charity.
The poll reflected the impact on U.S. airlines. Forty-three percent said they
are more afraid to fly in an airplane, while 50 percent reported no
difference in their confidence in air travel, the poll showed. Only 19% said
they feel very safe flying in a commercial jetliner.
No Change in Plans
Baxter, shopping in California, said she and her husband are traveling next
week to Montana by plane. ``Sure I'd be nervous, but I don't think I'd change
my plans,'' she said.
Consumers may be containing their level of pessimism until they see how the
U.S. responds to the attacks or whether terrorist groups strike again, Witt
said.
Eighty-nine percent of U.S. adults say they like the way Bush is responding
to the assaults, and 78 percent support military attacks against those
responsible.
Fifty-five percent said the Social Security surplus shouldn't be spent on the
war effort, and 35 percent said it should.
The survey results showed men and women differed in their degree of
confidence in the country's future. Thirty-eight percent of women expect the
economy will worsen in the next year, compared with 26 percent of men. Almost
half of men -- 46 percent -- expect economic growth will accelerate, compared
with 30 percent of women, the poll found.
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