Consumers Regain Confidence

Don Hogsett, Staff Staff, October 2, 2006

With consumers doing an abrupt about-face over the past 30 days, and saying they feel better about the current economy and the near-term outlook, confidence levels climbed unexpectedly higher during September, erasing at least a part of the prior month's big drop in sentiment, The Conference Board reported.

After skidding down by 6.4% in August, The Conference Board reported that sentiment improved by 4.3% during September, clawing back to a level of 104.5.

Buoying consumers' spirits was “a more favorable assessment of current conditions coupled with a less pessimistic short-term outlook,” explained Lynn Franco, director of the business think tank's Consumer Research Center.

But the motivation for the sudden rebound in sentiment remains vague, said Franco. “Even though consumers' concerns have eased, there is little to suggest a significant change in economic activity as we enter the final quarter of 2006.”

Weighing ongoing conditions, the number of consumers who said conditions are “good” increased to 27.4% from 26.2% the month before. Those claiming conditions are “bad” eased to 15.4% from 16.6%.

Labor market conditions were mixed. The number who said jobs are “plentiful” improved to 25.9% from 24.5%. But at the same time, the number who said jobs are “hard to get” rose modestly as well, to 21.3% from 21.1% in August. Looking six months out, consumers were less pessimistic than in August. The number who expect conditions to worsen declined to 10.6% from 12.9%. The number who expect conditions to improve was unchanged at 16.3%

Buying plans in Sept.
Plans to purchase over the next six months

Source: The Conference Board
Homes -26.3%
Carpets -12.2
Cars -11.6
Major Appliances -19.5
Vacations 8.0

Confidence by region

Region % change
Source: The Conference Board
New England -3.5%
Middle Atlantic 16.8
East North Central 1.8
West North Central 18.1
South Atlantic 1.7
East South Central 22.5
West South Central 0.8
Mountain 13.2
Pacific 3.5

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