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Economy in Brief

Consumer Confidence Eased
by Tom Moeller October 31, 2006

Consumer confidence in October eased 0.5% to 105.4 following an upwardly revised 5.7% gain during September, the Conference Board reported. The decline ran counter to Consensus expectations for an increase to 107.9.

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 fell 2.8% (+15.7% y/y) and reversed most of the revised 3.6% September increase. The percentage of respondents who viewed business conditions as good (28.1%) actually rose to the highest since May but the percentage that viewed jobs as plentiful fell modestly. The percentage that viewed jobs as hard to get (22.0%) rose to the highest level this year.

The index measuring consumers' expectations added to its sharp September rise with a 1.8% increase (32.1% y/y). Expectations of better business conditions in six months rose to the highest (18.5%) since last November and more respondents expected more jobs (15.2%).

The expected inflation rate in twelve months was stable at 4.9%, the lowest since March.

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

Conference Board October September Y/Y 2005 2004 2003
Consumer Confidence 105.4 105.9 23.7% 100.3 96.1 79.8
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