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Consumers Optimistic About the Future

Although the Present Situation Index fell in December, the broader Consumer Confidence Index rose for the second consecutive month and now stands at 52.9, The Conference Board reported last week.

"A more optimistic outlook for business and labor market conditions was the driving force behind the increase in the Expectations Index. Regarding income, however, consumers remain rather pessimistic about their short-term prospects, and this will likely continue to play a key role in spending decisions in early 2010," said Lynn Franco, director of The Conference Board Consumer Research Center.

The Present Situation Index declined to 18.8 from 21.2 in November and remains at a 26-year low, she noted.

The survey of 5,000 households found respondents who believe business conditions are "bad" rose to 46.6% from 44.5% and those who feel conditions are "good" fell to 7.0% from 8.1%.

Consumers remained uncertain about jobs. Those claiming jobs are "hard to get" dropped to 48.6% from 49.2%. However, those claiming jobs are "plentiful" also dropped to 2.9% from 3.1%. Still, they were more optimistic about the months ahead, with those anticipating more jobs to become available increasing to 16.2% from 15.8%.

There was an uptick in the number of people who think business conditions will improve over the next six months, with 21.3% holding that view compared to 19.7% in November. In addition, consumers who expected business to worsen declined to 11.9% from 14.6%.

They don't expect to benefit financially, however. The ratio of consumers who expect an increase in income fell to 10.3% from 10.9%.

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