Confidence Hits 3-Year High

Don Hogsett, February 6, 2006

With Americans feeling more bullish on the current state of the economy, and optimistic about the outlook for jobs, consumer confidence climbed for a third straight month in January, rising by 2.4% to its highest level in more than three years, The Conference Board reported.

The bellwether gauge of consumer sentiment — widely watched by Wall Street as a measure of consumer spending going forward -- rose to a level of 106.3 from 103.8 in December. It was the highest the index has climbed since hitting a level of 106.3 in June, 2002.

“This month's increase was driven solely by consumers' assessment of current economic conditions, especially their more positive view of the job market,” said Lynn Franco, director of The Conference Board's Consumer Research Center.

The caveat, Franco said, is that consumers say they're still wary about the future. “While consumers rate current conditions more favorably than they have in more than four years, the improvement has not translated into greater optimism about the near-term future. In fact, the gap between consumers' assessment of current conditions and their expectations remains wide.”

Looking six months out, consumer sentiment was more subdued. The number who expect business conditions to worsen rose to 10.5% from 9.1% in December. Correspondingly, the number of those who expect conditions to improve declined to 17.7% from 18.4%.

Buying plans January
Plans to purchase over the next six months

Source: The Conference Board
Homes 0.0%
Carpets 5.2
Cars 7.8
Major appliances 3.7
Vacation -0.9


Confidence by region

Region % Change
Source: The Conference Board
New England 3.5%
Middle Atlantic -1.8
East North Central 4.4
West North Central 5.6
South Atlantic -2.3
East South Central 11.5
West South Central 1.7
Mountain 25.5
Pacific 11.4


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