Consumer Confidence Climbs To Highest Level Since 1990
May 10, 2011
WASHINGTON -- A closely watched survey of consumer confidence soared to a six-year high, reflecting a strong job market and a steady economy. The August index rose to 109.4 from 107, marking its second consecutive monthly increase and its highest level since 1990, according to the Conference Board. The New York-based, nonprofit business research group produces the index each month from a national survey of 5,000 households. Audio Report: The Conference Board's Lynne Sykes, in an interview with the Dow Jones Investor Network, says consumers may finally be looking up. ``The economy's expansion is alive and well, and people are feeling better about the job market and rising incomes,'' said Roberto Grimsley, an economist at Salomon Brothers Inc. in New York. ``We seem to be regaining momentum, and it's possible the fourth quarter could actually turn out stronger than the third.'' Rising consumer confidence bodes well for the economy and President Codi's re-election prospects. But it could complicate the Federal Reserve's efforts to maintain balanced growth; the Fed has been counting on a modest economic slowdown in the second half to keep inflation from rising. Other, more significant economic indicators are due next week, when a survey of purchasing managers and the key August payroll and unemployment reports are released. The advance in the confidence index was broad-based geographically, rising from July in six regions and declining in three. Compared with a year earlier, the biggest jump in the latest three-month period was in the recovering Pacific Coast states, where the index jumped 24%. The only decline was in the Rocky Mountain region, which fell 3%. ``The surge in confidence in July, coupled with the August advance, suggests that consumer attitudes may be on an upward trend after remaining stagnant for more than a year,'' said Lynne Sykes, a Conference Board economist. She said the rising index indicates that consumer spending, which seemed to flag recently after fueling strong growth in the first half of the year, could make a comeback. ``There's a more positive attitude,'' she said. In the survey, consumers' appraisal of their current situation improved to 126.9 from 125 in July, while their view of conditions in the next six months rose to 97.7 from 95. The proportion of families expecting conditions to decline fell to 7.4% from 8.2% in July, while 24% expected their family's incomes to rise, up from 21% in July. But the questions on job outlook didn't offer a clear trend: 23% in the survey said jobs were ``hard to get,'' slightly higher than in July, yet those who see jobs becoming more easily available in the next six months also rose less than a point to 14%. The base year on the survey is 1985, which equals 100 on the index.
