While economists leap to their charts with each report that points to a revival of activity, consumers have been slow to join the chorus of approval.

Perhaps because the job market remains pocked by severe weakness, surveys show Americans are not yet gung-ho about their prospects. Typically, they say that their current situation looks fairly good – not great – and that the months ahead appear iffy.

Happily, the lukewarm response hasn’t kept them from firing up spending for glitzy new cars, luxurious new houses and the furnishings needed to fill them.

That brings us to Tuesday’s August consumer confidence survey from the Conference Board, a business research group. Chicago economist Carl Tannenbaum is looking for it to show a mild uptick, to around 80, or just a bit less, from 76.6 in July.

“Last month’s reading was a disappointment, as the index declined from 83.5 in June,” said Tannenbaum, chief economist of LaSalle Bank.

As recently as March, he said, confidence was at a rock bottom 61.4, amid general concern over the situation in Iraq. “Since then, worries about the job situation have largely pushed aside Iraq as the primary focus of consumers,” he said.

“The economy certainly has been getting better, but there is just no way Americans can accept the idea of an economic recovery unless it includes more jobs and better pay,” he said.

“Luckily, at this point, it appears that second-half growth will be quite a bit stronger than the expansion of recent months. That should mean additional hiring between now and the end of this year.”

With mortgage rates marching upward, economists believe it is only a matter of time before home building and construction start feeling the pinch. But don’t look for any signs of a downturn in Monday’s report on July resales of existing homes or Tuesday’s barometer of the month’s new home sales.

Economist Ian Shepherdson says the current record level of housing construction should remain nearly steady for another few months.

However, Shepherdson, of High Frequency Economics, Valhalla, N.Y., says that “with mortgage applications starting to falter in the face of significantly higher mortgage rates, sales and starts will be weaker by the end of the year.”

Although it is too soon to look for signs that builders are cutting back, he added, “the boom cannot last indefinitely.”

Because the nation’s manufacturing sector has been in a long funk, with employment falling by 2 million positions in less than three years, economists will be carefully monitoring Tuesday’s report of July orders for durable goods. A consensus is that they will be up by 0.8 percent, following a 2.6 percent leap in June.

The good news for factories is that car sales continue to sizzle. But business spending remains soft, especially for heavy industrial equipment. Few new facilities are needed with production lines operating at a rate of only about 75 percent of capacity.

Also due out: A revision of second-quarter gross domestic product, on Thursday. Look for an advance from the 2.4 percent growth rate reported earlier because of surprising strength in exports.

The stock market during recent sessions has pushed to the highest levels in 14 months, prompting some analysts to declare it is time to take money off the table.

They cite a huge move by so-called cyclical issues, which are sensitive to the economy, since March. Some measures show cyclical stocks are up by about 45 percent in that period.

Flossmoor, Ill., investment manager Richard Evans says the market’s strength “is increasingly being delivered by the old-line blue-chips,” notably 3M (Minnesota Mining & Manufacturing), which has been near an all-time high.

But Evans also has a word of caution:

“The bears might be interested to note that 3M is splitting its stock for only the third time in its history,” said Evans, in his Renaissance Report newsletter.

“However, the other two splits, in 1987 and 1972, were at major market tops.”

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(c) 2003, Chicago Tribune.

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