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Consumer confidence dips after economic stumble // ECONOMIC REPORTS

The economy, which stubbed its toe in the final quarter of 2005, is probably back on firm footing in the opening quarter of this year despite a cooling housing market and somewhat skittish consumers.

After digesting the latest batch of economic reports, released Tuesday, analysts predicted that economic activity is rebounding nicely in the January-to-March quarter and will grow by at least a 4.5 percent rate. For all of 2006, the economy will log another year of solid - though slower - growth, they said.

"The economy is doing pretty well now in terms of momentum," said Brian Bethune, economist at Global Insight.

The economy ended 2005 on wobbly footing, expanding at an annual rate of 1.6 percent in the October-to-December quarter, the worst showing in three years, the Commerce Department said.

While slightly better than the first estimate of a 1.1 percent growth rate for the quarter, the new figure showed a loss of momentum from the third quarter's brisk 4.1 percent pace. The slowdown was blamed on lingering fallout from the Gulf Coast hurricanes and the toll of lofty energy prices, which especially caused consumers to tighten their belts.

Another report provided further evidence that the housing market, which posted record high sales five years in a row, has lost its sizzle.

Sales of previously owned homes dropped 2.8 percent in January to a rate of 6.56-million units, the slowest pace in two years, according to the National Association of Realtors.

The median home price, at which half sell for more and half for less, was $211,000 in January. That was the same as in December but up 11.6 percent from a year ago.

Analysts said the report was consistent with their forecasts for a gradual cooling - not a jarring collapse - in the housing sector this year.

A third report showed consumers' confidence in the economy dipped in February to 101.7, from 106.8 in January, the Conference Board said.

Other recent economic barometers, including retail sales and jobs, suggested the economy did start bouncing back at the beginning of this year. The nation's unemployment rate dropped to 4.7 percent in January, the lowest in 4 1/2 years.

But that hasn't helped President Bush's standing with the public. The president's job approval rating and his marks for handling the economy are mired near their lowest levels, according to an AP-Ipsos poll released last month.

Business investment in equipment and software, export growth and inventory building by companies all turned out to be better than first estimated, leading to the higher reading on gross domestic product in the final quarter of 2005. Less deep cuts in government spending contributed to the upgraded GDP reading.

GDP measures the value of goods and services produced within the United States and is the best measure of the country's economic fitness.

Consumer spending - usually a main force of economic activity - rose at a rate of 1.2 percent in the final quarter of 2005, the slowest since the second quarter of 2001. Analysts predict consumer spending is reviving this quarter.