Reverse Spin: War in Iraq fails to defeat consumers

You didn’t really think the war with Iraq was going to sap consumer confidence forever did you? The New York-based Conference Board reported Tuesday that its index of consumer confidence surged to 81 in April, up a scorching 20 points from March.

The increase, which reversed four months of steady declines, marked the third-biggest gain on record, and the largest since March 1991, when the index climbed 21.7 points following the success of Operation Desert Storm.

“The big bounce in today’s confidence number is a strong signal that the economy is on its way back,” said Mark Zandi, chief economist at Economy.com Inc., a West Chester, Pa.-based consulting firm.

Spending spree

It is early spring, the time of year when every red-blooded American’s thoughts turn to, er, shopping!

You got that right! Credit cards, debit cards, cash or layaway – through whatever the form of payment – consumers flung open their wallets in March.

Consumer spending rose by 0.4% in the month, the biggest rise all year, the Department of Commerce said Monday. In February, spending rose a miserable 0.1% after having fallen by 0.1% in January.

Poor vital signs

Feeling overworked and underappreciated?

This might explain why: U.S. productivity, which is the amount of work an employee does in an hour, improved in the first three months of 2003, increasing at an annual rate of 1.6%. Still, the improvement was slightly below the 2% growth rate economists had been expecting.

In other economic news, the Institute for Supply Management in Tempe, Ariz., Thursday said its manufacturing index slipped to 45.4 last month, from 46.2 in March. A reading below 50 shows manufacturing activity is contracting, while a reading above 50 points signals growth.

That, coupled with the fact that jobless claims have been above the 400,000 mark for 11 straight weeks, indicates the economy is ailing.

“The persistent high level of new claims for unemployment insurance suggests that firms may still be finding it possible to meet their customers’ tepid increases in demand with a leaner work force,” Federal Reserve Chairman Alan Greenspan said Wednesday.

He said the economy should gradually grow stronger with an end to the war. Of course, it doesn’t help that the unemployment rate jumped to a four-month high of 6% last month, according to the Department of Labor.

Retiring his number

Warren Buffett is retiring from playing baseball.

Yes, that’s right: The world’s second-richest man scrapped plans to throw the first pitch at an Omaha Royals minor league baseball game on Saturday as 10,000 shareholders gathered for Berkshire Hathaway Inc.’s annual meeting.

Mr. Buffett, who owns 25% of the baseball team, has been lobbing an opening-game pitch to the delight of shareholders for the past nine years. He broke the news to his fans – some of whom had gathered this past weekend for Berkshire’s fun-filled, three-day shareholder meeting – in the company’s annual report.

“There won’t be a ball game this year,” he wrote. “After my fastball was clocked at 5 mph last year, I decided to hang up my spikes.”

Debbie Bosanek, Mr. Buffett’s assistant, said Thursday the game was taken off the itinerary because of scheduling difficulties. Mr. Buffett appears to have no intention of retiring his business suit, however.

On Friday, Omaha, Neb.-based Berkshire said it was buying MacLane Co. Inc., a grocery distribution subsidiary owned by the nation’s No. 1 retailer, Wal-Mart Stores Inc.

Closing Quote

“This is not a solution to the problem. It’s like the drunk looking for their wallet under the lamppost because the light is better there.”

– Adviser John Montgomery, on blindly replacing proprietary research with the independent variety. Page 21