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Economy in Brief

Consumer Confidence Recovered
by Tom Moeller September 26, 2006

For September, the Conference Board indicated that consumer confidence recovered most of the prior month's drop, which was revised shallower, with a 4.3% increase to 104.5. Consensus expectations had been for a more moderate increase to 103.

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 recovered 3.1% (15.7% y/y). The percentage of respondents who viewed business conditions as good (27.4%) rose back to the July level and the percentage that viewed jobs as hard to get (21.3%) rose for the second month.

The index measuring consumers' expectations also recovered the prior month's decline with a 5.5% rise (23.1% y/y). Expectations for better business conditions improved (16.3%) and more respondents expected an increase in jobs (14.4%).

Expectations for the inflation rate in twelve months dropped to 4.9%, the lowest level since March.

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

What Happens To Banks When House Prices Fall? U.S. Regional Busts of the 1980s and 1990s from the Federal Reserve Bank of St. Louis is available here.

Conference Board September August Y/Y 2005 2004 2003
Consumer Confidence 104.5 100.2 19.4% 100.3 96.1 79.8
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