September to End with Renewed Consumer Confidence

Falling gasoline prices helped ease American shoppers’ worries in September, sending a measure of consumer sentiment higher than analysts expected, reports an Associated Press article on MSNBC.com.

The New York-based Conference Board said Tuesday that its consumer confidence index rebounded to 104.5 from a revised reading of 100.2. in August. Analysts had expected the index to rise to 103. The reading, the highest since July’s 107, followed a big dip in August, when employment worries dragged down consumer sentiment.

The private research group’s Present Situation Index, which measures how shoppers feel now about economic conditions, rose to 127.7 from 123.9. Its Expectations Index, which measures consumers’ outlook over the next six months, rose to 89.0 from 84.4 last month.

“What we are seeing is an easing of concerns. People are becoming less pessimistic, not significantly more optimistic,” said Lynn Franco, director of The Conference Board Consumer Research Center.

Even more important than lower gas prices, according to economists, is that the job market is steady, though consumers still showed some concerns about jobs in the latest consumer survey, Franco said. The government’s latest report on employment showed that the jobs bounced back in August, which eased fears that the economy might be slowing too much.

Falling gasoline prices and a steady job market are good news for retailers as they prepare for the critical holiday season. In general, shoppers have remained resilient throughout the year — even when energy costs were higher — though some chains like Wal-Mart Stores Inc. that cater to low-income shoppers have blamed higher prices at the pump for slowing sales.

Franco cautioned, however, that although consumers’ concerns have eased “there is little to suggest a significant change in economic activity as we enter the final quarter of 2006.”

The consumer confidence report — derived from responses through Sept. 19 to a survey mailed to 5,000 households in a consumer research panel — showed that consumers’ views of the labor market were mixed and hadn’t shown dramatic improvements, Franco said.

The National Retail Federation forecast last week an “above-average” holiday season. It expects holiday sales will rise a solid 5 percent in the combined November and December period, though less than the 6.1 percent in the year-ago period.