U.S. Consumers More Confident About The Economy

Consumers are more upbeat in their expectations that the U.S. economy is getting back on track. In fact, their confidence is much higher than expected.

The confidence index of the Conference Board climbed to 54.1 in August – higher than the 48 that was anticipated and the first increase since May. It was 47.4 in July. The New York-based research group attributed the move to people becoming less worried about the job market.

The reason that the number is of interest is consumer spending accounts for two-thirds of economic activity in the United States. In this quarter, programs initiated by the government including “Cash for Clunkers” and an extension of benefits among the jobless have helped shoppers.

The results of the survey are based on questions sent to a representative pool of 5,000 households in the United States. Respondents are queried on such topics as current business conditions and upcoming levels of employment.

“Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend,” said Lynn Franco, director of The Conference Board Consumer Research Center. “Consumers were more upbeat in their short-term outlook for both the economy and the job market in August.”

In the latest report, 18.4 percent of consumers predicted more job creation in the next six months, compared to 15.5 percent last month. Those who felt jobs are “hard to get” dipped to 45.1 percent from the 48.5 percent in July.

For income, 10.6 percent of the people surveyed said they believe their incomes will go up. The number was 10.1 percent last month.

On the business conditions front, 22.4 percent of the survey respondents expected it to improve during the next six months. Last month the margin was 18.4 percent.

Separately in the S&P/Case-Shiller home-price index, an increase of 2.9 percent was reported in the second quarter compared to the first quarter of the year. This was the first time an increase was reported since 2006 and it was the biggest jump in nearly four years.

The reports were released on the same day President Barack Obama nominated Ben Bernanke to a second term as head of the Federal Reserve. Bernanke is credited with expanding the power of the central bank at a rate big enough to tackle the worst crisis of the U.S. economy since the Great Depression.

His reappointment still requires approval by the U.S. Senate. If endorsed, Bernanke would start his second term on Jan. 31.