Confidence rises in state

By Jim Kinney

05/26/2009- The Republican

SPRINGFIELD - Consumer confidence in Massachusetts jumped by 26 points in April, hitting 65 on a scale where 100 points is "neutral" and anything below 100 is negative.

It was the highest consumer confidence level since late 2007, said Court C. Boulanger, a spokesman for MassInsight Corp.

MassInsight is a private consulting firm that carries out quarterly consumer-confidence surveys. The new numbers came out on Friday. 
 
"I think there is sort of this idea that the worst may be over or close to getting over," said Robert A. Nakosteen, a professor of economics and statistics in the Isenberg School of Business at the University of Massachusetts-Amherst. "These things are so psychological."

People who are worried about their jobs do not spend money, he said. When people don't spend money, stores don't order goods, factories don't make goods, and businesses of all kinds cut staff. That makes more people worry about their jobs.

Rebounding confidence might be the first step in reversing that process, Nakosteen said.

"Man, it's just that simple," he said. "A real recovery might lag consumer confidence. But it is the first step."

Karl J. Petrick, an assistant professor of economics at Western New England College in Springfield, said that a sharp jump in consumer confidence fits in with the up-and-down stock market.

"Everything is overreacting to good and bad news," he said. "So consumer confidence jumps, but it jumps after a freefall."

According to MassInsight, consumer confidence was 38 points in January.

The Conference Board's national consumer confidence was 39 points in April, compared with 38 in January, also measured on a scale where 100 is "neutral." The board's consumer confidence measure for all of New England was 32 in April and 31 in January.

According to the MassInsight survey, only 14 percent of respondents think business conditions are good, 33 percent responded "normal," and 51 percent said conditions are bad.

Only 4 percent of the 500 respondents said there are plenty of jobs, 34 percent said "not many," 58 percent said jobs are hard to get, and 4 percent did not know. 
 
When asked about the job picture six months from now, 27 percent of respondents said there will be more jobs available, up from 18 percent in January, and 2 percent did not know.

Fiteen percent of the respondents told MassInsight they think their household income will be higher six months from now than it is today, 67 percent said about the same, 16 percent said it would be lower, and 2 percent did not know.

But in January, 21 percent of respondents thought their income would drop.

"No one is singing 'Happy Days Are Here Again'," said Petrick. "It's less pessimistic. That's a good thing."

Jim Kinney can be reached at jkinney@repub.com