August 30, 2005--Consumer confidence levels rebounded in August and will continue to grow despite a steady rise in gas prices, according to Conference Board figures released Tuesday.
The upbeat assessment stands in contrast to a recent University of Michigan survey, which reported a decline in consumer optimism from previous months, and is more in line with expectations by National Federation of Independent Businesses of improved spending in the months ahead.
The board's monthly survey, based on a sample of 5,000 U.S. households, put consumer confidence for August at 105.6, a boost from 103.6 in July. Also up were the present situation index, at 123.6 from 119.3, and the expectations index, from 93.7 from 93.2.
Some 29.8% of those surveyed felt business conditions were "good," up from 28.7% in July, while those who felt conditions were "bad" dropped to 15.1% from 16.7%. Those saying jobs were "hard to get" slipped to 23.2% from 23.8%, dropping below the number who felt jobs were "plentiful," at 23.5%, for the first time since October 2001, the board reported.
Lynn Franco, the director of the Conference Board's Consumer Research Center, which conducts the survey, said she fully expected a rosier outlook to continue for the rest of the year. "Consumers appear to be weathering the steady rise in gas prices quite well," Franco said in a statement released Tuesday.
The Michigan Consumer Sentiment Index, released August 25, put consumer confidence for August at 89.1, sliding from highs of 96.5 for July and 96.0 for June, but above an 86.9 reading in May. The results, below projections released earlier this month, were blamed primarily on record-high fuel costs this summer eating into household. The monthly figures are gathered from at least 500 telephone interviews asking respondents to gauge their attitudes on personal finances, businesses conditions and spending.
Responding to the Michigan results, Willaim Dunkelberg, the chief economist at National Federation of Independent Businesses, said he didn't expect a "decline in sentiment will foreshadow a decline in spending." By contrast, Dunkelberg anticipated improved profits and stronger sales will into the third quarter.