Nov. 29 (Bloomberg) -- Fresh reports depicted a buoyant U.S. economy as consumer confidence, new home sales and durable goods orders surpassed forecasts.

The Conference Board, a New York-based research group, said its consumer confidence index rose to 98.9 this month from 85.2, the biggest rise in more than two years. Purchases of new homes jumped to a record last month and orders for long-lasting equipment, such as aircraft and machinery, rose twice as much as predicted, according to Commerce Department data.

``Coming after the energy shocks and Katrina, it's a remarkable spring-back,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Inc. in New York. ``The economy seems to have an underlying resilience.''

Declining fuel prices are boosting confidence and spending, bolstering expectations for economic growth this quarter. Shoppers splurged over the Thanksgiving weekend at discount retailers such as Wal-Mart Stores Inc. U.S. Treasury securities fell after the reports signaled Federal Reserve policy makers will keep raising interest rates.

The statistics fly in the face of polls showing many Americans say the economy is in recession. A survey by the Manchester, New Hampshire-based American Research Group found that 43 percent of those questioned said the economy was in a recession, while 44 percent said it wasn't.

Sixty-two percent said they disapprove of the way President George W. Bush is handling the economy, according to the poll of 1,100 adults conducted between Nov. 19-22.

Growth Forecast

Economists at Morgan Stanley boosted their forecast for economic growth this quarter to a 3.8 percent annual rate from 3.1 percent after the durable goods report showed an increase in sales of business equipment and a rise in inventories.

Durable goods orders increased 3.4 percent after a 2 percent decrease in September. Sales of new homes jumped 13 percent last month to a 1.424 million annual rate.

All three economic indicators exceeded economists' median forecasts in Bloomberg News surveys. New home sales were predicted to fall to a 1.2 million rate, confidence was forecast to rise to 90.2 from a previously reported 85, and the durable goods orders were more than twice the 1.5 percent estimate.

U.S. Treasuries fell after the reports bolstered speculation the Fed may raise interest rates at least two more times. The reports put an end to a two-day rally that pushed 10-year yields to the lowest in five weeks. The yield on the benchmark 10-year note rose to 4.48 percent at 5 p.m. in New York from 4.40 percent yesterday.

Fed

``The market had gotten itself into a position where the thought process was the economy was cooling off a bit and the Fed was close to being done raising interest rates,'' said Kevin Flanagan, an interest-rate strategist at Morgan Stanley in Purchase, New York, who advises the firm's individual investor clients. ``These numbers threw a wrench into the works.''

The surge in confidence brings the figure above the 96.9 average over the past five years. The gauge was at 105.5 in August, before the full effects of the recent hurricanes were measured.

``Confidence was healthy,'' said Alan Ruskin, director of U.S. research at 4Cast.com in New York. ``A lot of it is normalization post-hurricanes, and the energy prices coming off their highs is part of that.''

The average retail price for a gallon of all grades of gasoline fell to $2.20 in the week ended Nov. 28 from $3.12 the week ended Sept. 5, just after Hurricane Katrina. The latest average price is still 11 percent higher than a year ago.

Holiday Sales

Consumers splurged over the Thanksgiving weekend at discount retailers such as Wal-Mart, leading the National Retail Federation to predict this will be the second-biggest holiday selling season since 1999.

Job creation is also helping sentiment. The U.S. may have added 210,000 jobs this month, based on the median forecast before the Labor Department's Dec. 2 report. The Conference Board compiles its index of consumer confidence by surveying 5,000 households on general economic conditions, their employment prospects and spending plans.

New home sales unexpectedly rose to a record last month, suggesting people bought houses in anticipation of even higher mortgage rates in coming months.

The average rate on a 30-year fixed mortgage rose to 6.07 percent last month from 5.77 percent in September, according to Freddie Mac, the No. 2 U.S. mortgage buyer. Last week, the 30-year rate was 6.28 percent.

Regions

Sales rose in three of four regions. They rose 47 percent in the West to an all-time high of 496,000; 43 percent in the Northeast to 86,000; and 1.9 percent in the South to a record 682,000. Sales fell 9.5 percent in the Midwest to 199,000.

Through October, 1.1 million new homes have been sold compared with last year's all-time high of 1.2 million. Even with the October increase, economists and industry analysts say record inventories suggest fewer sales early next year.

``Any slowing in sales will reveal moderate overbuilding,'' said Steven Wood, chief economist at Insight Economics in Danville, California.

The October rise in durable goods, or expensive items made to last at least several years, was boosted by more bookings for Boeing Co. aircraft. Excluding transportation equipment, which is volatile month to month, orders rose 0.3 percent after a 0.2 percent fall in September that was smaller than initially reported.

Corporate Spending

Business spending to replace older machines and replenish dwindling inventories will fuel economic growth this quarter, economists said. Unfilled orders for such equipment rose in October for a fifth straight month, signaling pent-up demand and production gains through early next year, they said.

``The numbers are continuing to signal strength in manufacturing,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. ``Inventories are lean, and so if anything, that's going to add to growth for the next several months.''

Orders for transportation equipment jumped 11.4 percent, the biggest rise since May, with bookings for commercial aircraft surging 50 percent. Chicago-based Boeing, the world's second- biggest maker of commercial aircraft, received 36 aircraft orders in October, up from 24 in September.

To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserman@bloomberg.net; Bob Willis in Washington bwillis@bloomberg.net

Last Updated: November 29, 2005 17:11 EST