US consumers becoming more confident, study finds

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By: Wise Marketer Staff |

Posted on September 2, 2005

Following a slight decline in consumer confidence in July 2005, the American consumer is beginning to rebound in terms of willingness to spend, despite rising fuel prices hitting wallets across the USA, according to The Conference Board.

The Conference Board's 'Consumer Confidence Index', which had declined in July, rebounded in August. The Index for August settled at 105.6 (where 1985 represented a score of 100), up from 103.6 in July. Likewise, the Present Situation Index also increased, from 119.3 in July to 123.6 in August. The Expectations Index also edged up slightly, reaching 93.7 (from 93.2).

Lynn Franco, director of The Conference Board's Consumer Research Center, said: "Consumers appear to be weathering the steady rise in fuel prices quite well. In fact, their confidence in the current state of the economy, and particularly in the labour market, has propelled the Present Situation Index to its highest level in nearly four years (it was 125.4 in September 2001). Expectations continue to suggest more of the same for the remainder of this year."

Looking up
Consumers' overall assessment of ongoing conditions was considerably more favourable in August. Those claiming business conditions are "good" increased to 29.8% from 28.7%. Those claiming conditions are "bad" slipped to 15.1% from 16.7%.

The employment picture was also upbeat. Consumers saying jobs are "hard to get" decreased to 23.2% from 23.8%, while those claiming jobs are "plentiful" rose to 23.5% from 22.9%. For the first time since October 2001, consumers claiming jobs are plentiful outnumber those claiming jobs are hard to get.

In terms of short-term outlook, consumers' opinions improved slightly over July, with those expecting business conditions to improve in the next six months increasing to 18.7% (from 17.9% in July), despite those expecting business conditions to worsen also increasing slightly 9.7% (up from 9.5%).

Mixed labour
According to The Conference Board, the outlook for the labour market remains mixed. Those expecting more jobs to become available in the coming months increased to 16.6% from 15.6%, while those expecting fewer jobs also edged up to 17.2% from 16.7%. The proportion of consumers expecting their income to increase in the months ahead improved to 19.8% (over 18.6% in July).

The Consumer Confidence Survey, from which the index is derived each month, is based on a representative sample of 5,000 US households, and is conducted by research firm TNS NFO.

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