After a series of mostly downbeat economic reports, the latest survey by the University of Michigan offered evidence that consumer confidence will lift bank earnings a while longer.

One of the 11 components of the Department of Commerce's leading economic indicators, the Michigan survey, which was released Friday, showed consumer confidence at 92.3 on its index for the first half of June, an increase from the 89.8 level of late May.

"I would have thought, with some of the recent data on how weak the economy is, that would have eased off," said Roseann M. Cahn, chief economist in the equity research department at CS First Boston. "I was a bit surprised to see that bounce up."

To be sure, some economists discounted the value of the University of Michigan number, expressing doubt about the correlation between consumer confidence and spending.

"It's not a big deal," said Eugene Sherman, director of research at M.A. Schapiro & Co. "It'll provide a small plus to the leading indicators."

But others argued that continued consumer spending would help banks to the extent that it is fueled by borrowing.

The rise in confidence is "worth writing home about" said Jeff K. Thredgold, a senior vice president and chief business economist at Keycorp.

As is often the case, good news about the economy raised some worries that the Fed now would be less inclined to reduce interest rates - also considered a positive for banks.

But Mr. Thredgold thought the Fed could cut rates regardless of the University of Michigan survey.

"Each day the wind blows in another direction," he said. When the Federal Reserve considers monetary policy at the next meeting of its Federal Open Market Committee July 5 and 6, he said, it will no doubt weigh a host of numbers. "Today, the wind is blowing in the direction of the Fed sitting on the fence."

A compilation of two sets of data, the latest Michigan survey indicates improving consumer expectations and unchanged feelings about current conditions.

Consumer expectations rose to 83.9 in June, from 80.1 in May, while the assessment of current conditions rose only slightly, to 105.4 from 105.

The aggregate consumer confidence measure for the first half of June has almost returned to a level last seen in April, before talk of a harder landing for the economy began to circulate.

The release of the consumer confidence data had a short-term effect on the bond market, eroding the price of the benchmark 30-year Treasury bond by nearly a half point. But the long bond recovered later in the day.

Federal Reserve Vice Chairman Alan Blinder counterbalanced the market effect of the Michigan survey Friday afternoon when he reportedly expressed concern about the recent economic slowdown.

What the Fed will do July 5 remains a mystery, however. Economists pointed out that Mr. Blinder's comments Friday were in direct contrast to those he made Thursday discounting the likelihood of a recession.

Recent history suggests that changes in Fed policy on interest rates usually are made in a series of moves. From June 1989 to September 1992, for example, the Fed eased rates 24 consecutive times, held steady for 17 months, then raised rates seven times from February 1994 to February 1995.

However, analysts expect a difference this time.

"If we get a Fed move this time," said Mr. Thredgold, "there is no guarantee it'll be followed by others."

Economists said the Fed may ease rates once for political reasons but might not make further cuts.

Analysts generally didn't think the economy was headed for a recession and pointed to stock market activity as corroborating their view.

"The stock market is screaming 'recovery,'" said Gary Ciminero, chief economist at Fleet Financial Group.

The market usually declines three to six months before a recession, he said.

The stock market and consumer confidence both suggest a soft landing, economists added. "It's hard to have a recession when the consumer feels good," said Mr. Thredgold.

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