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Economy in Brief

Consumer Confidence Buoyed By More Jobs & Lower Gas Prices
by Tom Moeller December 28, 2005

The December index of Consumer Confidence surged 5.4% to 103.6 on top of a 15.4% recovery the prior month, reported the conference Board. The index stood at the highest level since August and exceeded Consensus expectations for a lesser gain to 102.3. The gain lagged a bit the 12.1% m/m jump 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.

The index of consumers' expectations added 3.6% (-9.0% y/y) to the 26.1% m/m spike during November. Optimism rose that more jobs would be created and that the inflation rate during the during the next year would ease.

Consumers' assessment of the present situation rose 7.3% (14.9% y/y) on top of a 5.0% increase during November. Jobs were viewed as plentiful by 23.3% of respondents, the highest since August and fewer (22.2%) thought jobs were hard to get, the lowest since 2002.

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

Conference Board Dec Nov Y/Y 2005 2004 2003
Consumer Confidence 103.6 98.3 0.9% 100.3 96.1 79.8
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