July 26 (Bloomberg) -- Consumer confidence probably rose to a three-year high this month amid sustained job growth and a buoyant housing market, economists said in advance of a private group's report.

The Conference Board's index is expected to increase to 106.3 in July, the median forecast of 54 economists surveyed by Bloomberg News, from 105.8 in June. The projected reading matches the level in June 2002.

The U.S. added 1.09 million jobs between January and June compared with 2.2 million for all of 2004, and jobless claims last week fell to a three-month low. Federal Reserve Chairman Alan Greenspan told Congress last week that the U.S. economy is in a sustained expansion, requiring further increases in interest rates to keep inflation in check.

``Betting against the American consumer's ability to buy stuff is a bad bet,'' Dennis Gartman, an economist and editor of the Gartman Letter in Suffolk, Virginia, said in an interview. ``As long as unemployment remains low and as long as people continue to be employed, they'll have cash flow and will spend it.''

The Conference Board's survey of 5,000 households is scheduled to be released today at 10 a.m. in New York. Forecasts in the Bloomberg survey ranged from 102.5 to 112.

The University of Michigan, on July 15, said its preliminary measure of consumer sentiment rose to 96.5 this month, from 96 in June. The group will release its final survey for the month on July 29.

Greenspan's Forecast

``Our baseline outlook for the U.S. economy is one of sustained economic growth and contained inflation pressures,'' Greenspan told the Senate Banking and House Financial Services committees in separate appearances July 20 and 21.

The Fed will likely keep raising interest rates to ensure inflation doesn't accelerate, Greenspan said. The policy-setting Federal Open Market Committee increased its benchmark overnight lending rate to 3.25 percent in nine straight moves starting in 2004 and is forecast to raise the rate again in August, according to a Bloomberg News survey.

June's unemployment rate fell to 5 percent, the lowest since September 2001, a report from the Labor Department showed on July 8. Wages rose 0.2 percent for a second month, which may support spending even as gasoline prices remain high.

The average retail price of a gallon of gasoline climbed to a record $2.37 in the week that ended July 11, according to the U.S. Energy Department. The average price this week is up 20 percent from a year earlier.

Higher gasoline prices may have weighed on confidence and kept the index from rising higher, economists said. It may also have limited spending.

``If gas prices are a concern that could mean spending is affected,'' said Elisabeth Denison, an economist at Dresdner Kleinwort Wasserstein in New York.

Housing

Surging house sales in June suggest consumers haven't retreated. U.S. sales of existing homes rose 2.7 percent to a record last month, the National Association of Realtors said yesterday in Washington. Sales increased at an annual rate of 7.33 million, surpassing the previous record of 7.18 million reached in April. Home sales are forecast to rise to a fifth straight annual record.

Consumer spending, which accounts for about 70 percent of the economy, will probably rise at a 3.2 percent annual pace this quarter, the same amount as in the second quarter, economists surveyed by Bloomberg News from June 30 to July 11 said. That compares with the average of 3.5 percent per quarter in the last 20 years.

Economic Outlook

The same economists raised their forecasts for economic growth to 3.5 percent in the third quarter and 3.4 percent in the fourth. Last month's survey showed economists expected growth to be 3.4 percent from July through September and 3.3 percent in the last three months of the year.

Consumer companies are reporting stronger earnings growth for the second quarter.

Fortune Brands Inc. said second-quarter profit climbed 19 percent and revenue rose 9.6 percent, helped by demand for Moen faucets and Jim Beam bourbon. Fortune, based in Lincolnshire, Illinois, said sales of its home improvement products and hardware rose. That's consistent with a report from the Harvard Center for Housing Studies that said U.S. spending on remodeling rose 4.5 percent from March through June.

                         Bloomberg Survey

                FIRM                          Cons.
                                              Conf.
               ------------------------------------
                 Number of replies               54
                MEDIAN                        106.3
                AVERAGE                       106.3
                High Forecast                 112.0
                Low Forecast                  102.5
                Previous                      105.8
                -----------------------------------
                4CAST Ltd.                    108.0
                ABN Amro Inc.                 104.5
                AIB Global Treasury           106.0
                Action Economics              105.0
                Aletti Gestielle SGR          106.3
                Argus Research Corp.          102.7
                Banc of America Capital       106.0
                Banc of America Securities    107.0
                Bank of Tokyo- Mitsubishi     106.2
                Barclays Capital              109.0
                Briefing.com                  106.5
                CIBC World Markets            107.0
                CantorViewpoint               106.3
                Citigroup                     112.0
                Commerzbank AG                106.0
                Credit Agricole               102.5
                Credit Suisse First Boston    107.0
                Daiwa Securities America      106.0
                DekaBank                      107.0
                Deutsche Bank Securities      104.0
                Deutsche Postbank AG          106.2
                Dresdner Kleinwort            106.0
                Exane                         107.0
                Fortis Bank NV                108.0
                Goldman, Sachs & Co.          106.0
                High Frequency Economics      106.0
                HypoVereinsbank AG            108.0
                IDEAglobal                    106.5
                ING Financial Markets         106.4
                IXIS-CIB                      104.5
                Informa Global Markets        106.0
                Insight Economics             106.5
                IntesaBci                     107.0
                J.P. Morgan Chase             105.0
                JPMorgan Asset Management     106.5
                Landesbank BW                 106.5
                Lehman Brothers               107.0
                Merrill Lynch                 104.0
                Mizuho Securities USA Inc.    106.0
                Morgan Stanley & Co.          106.0
                National Bank Financial       107.0
                Nesbitt Burns Inc.            105.8
                Nord/LB                       108.5
                RBS Greenwich Capital         108.0
                Ried, Thunberg & Co.          105.0
                Scotia Capital                106.0
                Stone & McCarthy Research     106.5
                Thomson Financial/IFR         106.1
                UBS Securities LLC            105.0
                Ulpia SA                      106.3
                Unicredit Banca Mobiliare     106.8
                Wells Fargo & Co.             105.0
                Westpac Banking Co.           107.5
                Wrightson Associates          106.0

To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net.

Last Updated: July 26, 2005 00:01 EDT