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Confidence stays strong in January

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WASHINGTON — Consumer confidence remained strong in early January as low interest rates and brightening job prospects left Americans feeling better about the future.

The AP-Ipsos consumer confidence index for January was at 100.1. That's as high as the Ipsos measure has been in more than 18 months. The December reading was 100.

Both numbers were the highest since May 2002 and far above the low point for the index of 61.5 in February 2003, a month when Americans' anxieties were rising right before the start of the Iraq war.

At that time, only a quarter of the public, 23 percent, thought their local economies would be stronger in the next six months. Three in 10 feel that way now.

Since the February low, Americans' feelings about their economic welfare have been boosted by a third round of tax cuts that took effect during the summer, continued low interest rates that have spurred record home sales and at least the initial signs of an improving labor market.

The government reported Friday that the unemployment rate dipped to 5.7 percent in December, the lowest level in 14 months.

Analysts said consumer confidence is being helped by the big boost the economy got from last summer's tax refund checks.

"When everybody saw those tax refunds showing up in their mailboxes in the summer, they rushed out to spend them . . . and people are still pretty darn happy," said David Wyss, chief economist at Standard & Poor's in New York.

The AP-Ipsos consumer confidence index, also called the Index of Consumer Attitudes and Spending by Household, is a composite measure of attitudes about the economy generally and consumers' own personal finances.

The attitudes are measured in a monthly telephone poll taken for The Associated Press by Ipsos-Public Affairs. The latest poll was conducted Jan. 5-7.

The survey showed people have grown increasingly confident about job security since late summer. The number of people feeling more confident concerning job security was 47 percent, up from 36 percent who felt that way in August. People also were feeling better about the current state of their local economy.

The job security figure has been trending higher since the summer when the economy finally began growing strongly enough to create new jobs.

That represented a sharp turnaround from the previous three years when more than 2 million payroll jobs disappeared under the impact of the country's first recession in a decade, the Sept. 11, 2001, terrorist attacks, and a wave of corporate accounting scandals and the anxiety created by the buildup to the Iraq war.

Economists said all consumer confidence gauges have been showing improvements since payroll jobs began posting increases in August.

"Employment is really the critical issue for consumer confidence," Wyss said.

The AP-Ipsos confidence index is benchmarked to a 100 reading on January 2002, the month the index was started by Ipsos and two months after the last recession ended in November 2001.

The January index reading was based on interviews with 1,000 adults and had a margin of error of plus or minus 3 percentage points.