American Consumers in Upbeat Mode

30 December 2004

Private research group the Conference Board reports that US consumer confidence leapt in December to its highest level since the summer.

The outburst of optimism not only reversed most of the decline recorded over the past four months, but also notched the second-highest reading in 2004.

The Board's consumer-confidence index soared to 102.3 in December, after standing at a revised 92.6 in November and 92.9 in October. This month's reading was the strongest since July's 105.7.

Comments Conference Board economist Lynn Franco: "The continuing economic expansion, combined with job growth, has consumers ending the year on a high note.

"The most significant contributor to the rebound in confidence has been the overall improvement in current conditions over the past twelve months."

The report confounded the expectations of the economic haruspices, a consensus of whom predicted a December reading of just 94. The stock market responded with a rosy glow, the Dow Jones Industrial Average rising to 78.41 points on Tuesday to close at 10854.54.

Consumers' views on the labor market were also more upbeat. Survey respondents believing jobs to be 'plentiful' stood at 19.4%, up from November's 17.1%. Those deeming them 'hard to get' edged down to 26.4% from 28% in November.

"Fabulous," opined BNP Paribus economist Brian Fabbri of the latest CB numbers. "We can certainly see that oil prices are down, stock prices are up, and election is passed. There is a generally good tone to the consumer sector and it's going to spill into early next year."

But Wall Street is cautious about cracking the Dom Perignon until it has sight of the holiday shopping figures.

Data sourced from Wall Street Journal Online; additional content by WARC staff