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Consumer confidence slips, but remains higher than expected

| Wednesday, May 1, 2002

NEW YORK (AP) — Consumer confidence slipped in April from a seven-month high, reflecting anxiety over unemployment and rising oil prices.

The reading suggests wavering optimism about the economy in the months ahead.

The Conference Board reported Tuesday that its Consumer Confidence Index fell to 108.8 this month from a revised 110.7 in March. Still, April's reading beat analysts' expectations of 107.5.

"It's a bit disappointing with the decline, but confidence still remains quite a bit better than late last year," said Gary Thayer, chief economist at A.G. Edwards & Sons Inc. "Consumer confidence seems to be in a holding pattern right now."

The industry group's index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending. And consumer spending accounts for about two-thirds of the nation's economic activity.

"Volatility in the Middle East, relatively high debt loads, a stock market gasping for air and a job market that isn't improving quickly aren't stopping consumers, but these factors are weighing on them," said Oscar Gonzalez, economist at John Hancock Financial Services.

Unemployment rose last month to 5.7 percent, and the Labor Department reported that energy prices shot up 3.8 percent in March, the biggest increase in 10 months.

The confidence index compares results to its base year, 1985, when it stood at 100. Before falling in April, consumer confidence was at its highest since August, when the reading stood at 114 prior to the Sept. 11 attacks.

Consumers rating current business conditions as good declined to 19.7 percent in April from 21.0 percent during the month before. Those who felt business conditions were bad rose to 19.4 percent from 18.3 percent.

Those expecting an improvement in business conditions in the next six months increased to 26.1 percent from 25.4 percent, while those expecting conditions to worsen also rose, to 6.4 percent from 6.2 percent in March.

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