NEW YORK (CNN/Money) -
Consumer confidence rose in January, a research group said Tuesday, but fell short of Wall Street forecasts, doing little to ease concerns that the job market's recovery may be slower than some economists had hoped.
The Conference Board, a business research group based in New York, said its closely watched index of consumer confidence rose to 96.8 from a revised 91.7 in December.
Economists, on average, expected the confidence index, based on a survey of 5,000 households, to rise to 98.5 from the originally reported 91.3, according to Briefing.com.
Though the index was lower than expected, it was still the highest level since 97.4 in July 2002 and significantly higher than the measure's March nadir of 61.4
"Growing optimism about the overall health of the economy continues to bolster consumers' short-term outlook," said Lynn Franco, director of the Conference Board's Consumer Research Center. "But consumers' assessment of current conditions, which strongly hinges on improvements in the labor market, remains both weak and volatile."
The survey's "expectations" index, measuring consumers' expectations for the future, rose to 108.1, the highest level since May 2002, compared with 103.3 in December. The "present situation" index rose to 80 from 74.3.
U.S. stock prices continued to fall in early trading after the report, while Treasury bond prices rose.
The report came as Federal Reserve policy makers began a two-day meeting to discuss the economy and interest rates. They are widely expected to keep the federal funds rate, an overnight bank lending rate that forms the basis for many banks' prime lending rates, at the lowest level in more than 40 years.
Though the U.S. economy has posted impressive growth numbers in recent quarters, leading some observers to worry a low fed funds rate might cause the economy to overheat, the pace of inflation growth has actually slowed while some measures of job growth have been anemic.
Tuesday's report was not inconsistent with that scenario and gave the Fed little reason to change its stance.
Confidence is watched closely by policy makers and analysts, since consumer spending fuels more than two-thirds of the nation's economy.
Of course, consumers don't always spend the way they feel -- confidence plunged following the Sept. 11, 2001, terror attacks, but consumers managed to keep spending, rushing to buy new automobiles at zero-percent financing.
Still, a weak job market has slowed wage and salary growth, which is critical to consumer spending. Non-farm payrolls are still 2.4 million jobs smaller than they were in February 2001, before the latest recession began, marking the longest such stretch of payroll pain since World War II.
Consumers' view of the labor market is still fairly weak, according to Tuesday's Conference Board data. The percentage of survey respondents saying jobs are "hard to get" dipped a bit, to 31.4 percent, still near the highest level in a decade, from 32.4 percent in December.
This percentage, along with the Labor Department's count of non-farm payrolls, have painted a picture of a torturously slow job-market recovery, contradicting the Labor Department's smaller survey of households, which has shown a shrinking unemployment rate and stronger job growth in recent months.
"People look at job availability, not unemployment rates, and they seem to be saying that only slowly are jobs becoming easier to get," said Joel Naroff, president and chief economist at Naroff Economic Advisors in Holland, Pa.