Consumer optimism in the nation's economy slipped in the third quarter, but still is in the midst of its longest continuous upswing since the 1960s, University of Michigan researchers reported today.
The university's Institute for Social Research said buying attitudes remained at record favorable levels in the third quarter, chiefly because of lower interest rates and agreeable market prices.
The institute's index of consumer sentiment slipped to 92.8 in the third quarter from 94.3 in the second and 98.9 a year earlier. The level of consumer confidence in February 1966 equals 100.
Despite the dip in the index, researchers said this was the 10th consecutive quarter with an index figure in the 90s -- the longest period of consumer optimism at that level since the 1960s.
The latest survey is based on nearly 2,000 interviews conducted by ISR researchers nationwide from July through September. The survey has an error margin of 4 percent in either direction, according to its director, Richard T. Curtin. He also said the survey shows that, although consumers expect slow economic growth during the year ahead, they also believe it will be accompanied by low rates of inflation and lead to only small increases in the unemployment rate.
"This outlook for slow but sustained growth, given the economic turbulence of past years, has supported the view that good times financially will continue in the country as a whole," he said.
The latest survey showed that 72 percent of all families held favorable attitudes toward buying conditions for large households, just below the all-time peak of 74 percent. Attitudes toward home buying set a record at 71 percent, while favorable attitudes toward automobile purchases were unchanged at the record level of 67 percent established in the second quarter.
Curtin said that increases in consumer spending are not likely to outpace growth in incomes, thus indicating a savings rate.
The latest survey also reveals an emerging "buyer's market," he said. "The response of consumers to the recent reductions has demonstrated not only their willingness to spend, but also their resolve to wait for discounts on prices and interest rates," Curtin said. "Gone are the days when consumers felt pressured to act by ever-escalating prices."
Twenty-five percent of the families surveyed expect continued economic improvement, down from 33 percent a year earlier and from the record high of 52 percent set in the second quarter of 1983, the survey said. Fifteen percent said they expect economic conditions to worsen, and 57 percent expect no change in the year ahead.