Consumer Confidence Seen As Weathering A Rate Hike
Jan. 13, 2005
By John S. McClenahen Although it runs counter to conventional wisdom, consumer confidence in the U.S. economy isn't likely to sink even if Alan Greenspan and his Federal Reserve Board colleagues raise short-term interest rates (again) next week. Two ...
ByJohn S. McClenahen Although it runs counter to conventional wisdom, consumer confidence in the U.S. economy isn't likely to sink even if Alan Greenspan and his Federal Reserve Board colleagues raise short-term interest rates (again) next week. Two reasons: historically low unemployment and stable labor markets. "Volatile financial markets and interest-rate hikes are not expected to have a significant impact on consumers' spirits," judges Lynn Franco, director of the Conference Board's Consumer Research Center in New York. "Confidence is expected to remain strong through the summer." The Federal Open Market Committee (FOMC) is slated to meet on June 27 and 28, and several leading economists believe that the recent falloff in construction and other unmistakable signs of a slowing U.S. economy will persuade the Fed to hold off on another hike in the federal funds rate. If so, the next scheduled time for adjusting rates would be the FOMC's Aug. 22 meeting, since Greenspan and company are slated to be vacationing in July.
