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Economy in Brief

Consumer Confidence Posted Surprising Increase
by Tom Moeller August 30, 2005

The Conference Board's August index of Consumer Confidence posted a 1.9% m/m increase to 105.6 following a 2.4% July decline that was shallower than initially reported.

Consensus expectations had been for a decline to 101.4 in sympathy with the 7.7% m/m decline in consumer sentiment reported last week by the University of Michigan.

During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.

Consumers' assessment of the present situation rose 3.6% m/m to the highest level since 2001. Jobs were viewed as hard to get by 23.2% of survey participants, down slightly m/m, but the 29.8% of participants who thought that business conditions were good was a further improvement on earlier strong readings.

Consumer expectations gained back 0.5% (-3.7% y/y) of a sharp 3.3% decline in July.

The Conference Board’s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

Conference Board August July Y/Y 2004 2003 2002
Consumer Confidence 105.6 103.6 7.0% 96.1 79.8 96.6
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