Consumer confidence rebounds in March

updated 4:08 p.m. ET March 28, 2006

NEW YORK - Americans’ optimism in the economy rebounded in March, sending a widely followed barometer of consumer sentiment to a near four-year high, a private research group said Tuesday.

The Conference Board said that its consumer index shot up 4.5 points to 107.2, the highest level since May 2002, when the reading was 110.3. Analysts had expected a reading of 102.

The latest measure was up from a revised 102.7 in February, which was down 4.1 points from January and broke a three-month rebound from last year’s Gulf hurricanes.

“The improvement in consumers’ assessment of present-day conditions is yet another sign that the economy gained steam in early 2006,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. “Consumer expectations, while improved, remain subdued and still suggest a cooling in activity in the latter half of this year.”

The component of the consumer confidence index that assesses views of current economic conditions rose to 133.3 from 130.3. Another component, which measures consumers’ outlook over the next six months, improved to 89.9 from 84.2 in February.

The Conference Board index is derived from responses received through March 21 to a survey mailed to 5,000 households in a consumer research panel. The figures released Tuesday include responses from at least 2,500 households.

Despite the improvement in consumer confidence, a modest stock market rally evaporated after the Federal Reserve raised a key interest rate by a quarter percentage point on Tuesday afternoon and left the door open for further rate hikes. The new level of 4.75 percent in the federal funds rate is the highest in five years and will likely lead to higher consumer borrowing costs.

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