US consumers seem to have recovered their confidence lost in the wake of Sept. 11, according to a survey released Tuesday that suggests a stronger-than-expected economic rebound.
The Conference Board said its consumer confidence index jumped in March to 110.2 from 95 a month earlier, a surprisingly strong increase of more than 15 points.
"Consumers' confidence has been bolstered by the improvement in business and labor market conditions," said Lynn Franco, director of research for the business research group.
"This new boom in confidence should translate into increased consumer spending and stronger economic growth ahead."
The index reading for March marks its highest level since August 2001, and was well above market expectations of a small rise to 98.
"Consumer confidence not only rebounded in March, it soared," said economist Oscar Gonzalez of John Hancock Financial Services. "These results not only shot past expectations, but also brought the index back above pre-Sept. 11 levels. More than any other factor, the improving outlook for jobs is boosting consumer spirits. Nothing inspires confidence like having a job or knowing you can get one."
Two other barometers in the survey also showed strong increases: the present situation index rose from 96.4 to 111.5 and the expectations index increased from 94 to 109.3.
"The latest gains are striking," Franco said. "The jump in the Present Situation Index is the largest gain experienced in 25 years, while the Expectations Index has not risen this sharply in nearly a decade."
Other economists agreed that improving confidence bodes well for the economy -- since consumer spending accounts for about two-thirds of US economic activity.
"This obviously bodes well for the consumer outlook," said Dick Rippe of Prudential Securities.
"As we have been saying, it is more important what consumers do than what they say. But consumers have been spending on housing and on cars -- that has been consistent. This positive outlook should have positive implications on future spending."
The recovery "could be really strong, at least if we believe the consumer confidence numbers," said Joel Naroff of Naroff Economic Advisors.
"With confidence soaring, the consumer will lead us to the Promised Land ... confidence is building and there is no reason to believe that spending will not follow."
Mark Vitner of Wachovia Securities said the latest reading helps confirm the end of the recession that began a year ago. "The fact that both the present situation and future expectations components surged in March, suggests, that in addition to economists, consumers now believe the recession is over too," he said.
In a separate report, the Commerce Department said orders for durable goods rose 1.5 percent in February from the previous month.
Gerald Cohen, an economist at Merrill Lynch, said the report was consistent with the recovery scenario for the US economy.
"Most of the gain was the result of a jump in the volatile aircraft category, where orders were up 41 percent," he said. "Even so, capital spending appears to be growing at about 10 percent rate in the first quarter, consistent with GDP growth of about six percent."
Adding to the optimism were comments from New York Fed President William McDonough that US economic recovery is gaining momentum.