Wednesday, August 26, 2009

Confidence Game

One of the big news items yesterday was the consumer confidence report, which came in strongly higher than analysts had expected. It was expected that consumer confidence would tick up slightly in August, but it surged, following declines in both June and July.

The consumer confidence numbers are put out by a nonprofit business research group based in New York called the Conference Board. They ask consumers about five areas:

1. Current business conditions
2. Business conditions for the next six months
3. Current employment conditions
4. Employment conditions for the next six months
5. Total family income for the next six months

Consumer confidence is actually still historically low. In answering the question about the prospects for their family's income, for example, only 10.6 percent said they were expecting an increase, but that's up from 10.1 percent in July.

But every little bit helps. As we said earlier this week, one thing holding back a full recovery is wariness on the part of business owners. If consumers are confident enough to start spending more of their hard-earned cash - and if business owners see that confidence returning - that's good for all of us.

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