By Mark Pender

NEW YORK (MNI) – A more than four-point gain in the Conference
Board’s consumer confidence index is in line with what looks to be a
slow climb out of a very deep hole, according to survey chief Lynn
Franco Tuesday.

“November’s 54.1 is still a weak reading and is still below May’s
62.7. After two years of personal losses, it’s going to take a lot to
convince consumers that the recovery is for real,” Franco said in a
telephone interview with MNI.

Specifically, she said consumers need a significant run of robust
payroll gains. “Gains of 100, 150, 175 won’t be enough,” she said
referring to monthly non-farm payroll change which is expected to rise
only 168,000 in Friday’s report for November.

Franco sees a slow grind ahead for the Conference Board’s index
with little chance for a run of double-digit gains. She considers
readings below 80 to indicate weakness in confidence with a reading of
90 consistent with general optimism.

“We’ve been down this road before, gaining momentum then losing
momentum,” she said referring to second-quarter gains that ended up
fizzling.

A standout negative in the day’s report is a four tenths drop in
home buying plans to a minuscule 1.7 percent.

“This is back to where we were in December last year. This is very,
very weak,” she said.

An offset to housing is a sudden jump in optimism on the stock
market. Stock market optimists rose nearly seven percentage points to
34.8 percent for the best reading in seven months. Pessimists fell to
24.9 percent for the lowest level in 10 months.

“It’s because the market has been able to hold over 11,000,” she
said referring to the singular impact of the Dow industrials on the
public’s perception.

Yet she stresses that changes in the value of financial assets,
such as homes or the stock market, have much less impact on confidence
than do changes in the jobs market.

“Financial assets aren’t really a major factor. The labor market is
the key to overall consumer confidence.”

A slip back in buying plans of major appliances, down one
percentage point to 24.4 percent, is not a significant indication of
weakness for the holiday retail season, she said.

For the holidays, she said confidence is pointing to no more than
incremental on-year gains in sales: “It looks like slow and steady
growth but nothing robust.”

** Market News International New York Newsroom 212-669-6430 **

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