Confidence back to pre-Katrina levels
Economic strength, falling gas prices and job growth credited for surge in December.
NEW YORK (CNNMoney.com) - Consumer confidence surged in December to the highest level since August, before Hurricane Katrina hit the Gulf Coast, the Conference Board said Wednesday.
The board's consumer confidence index rose to 103.6 for the month from a revised 98.3 in November. Economists had expected a rise to 102.5, according to Briefing.com.
"Consumer confidence continues to bounce back and is now at its highest level since Hurricane Katrina struck the Gulf Coast," Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement.
"The resiliency of the economy, recent declines in prices at the pump, and job growth have consumers feeling more confident at year-end than they felt at the start of 2005," Franco said. "Even though all of the improvement over the past twelve months has been in consumers' assessment of current conditions, and expectations remain below earlier levels, consumers are confident that the economy will continue to expand in 2006."
Consumers claiming business conditions are "good" decreased slightly to 24.3 percent from 25.6 percent in December. Those claiming conditions are "bad" decreased to 14.7 percent from 17.9 percent.
Consumers saying jobs are "hard to get" decreased to 22.2 percent from 23.6 percent, while those claiming jobs are "plentiful" edged up to 23.3 percent from 21.1 percent.
Consumers' short-term outlook improved moderately in December. Consumers' outlook for the next six months was slightly less upbeat, the business research group reported.
The Conference Board index has long been considered a good gauge of consumer spending, which drives two-thirds of the U.S. economy.
Some say the number has become less important in recent years, however, as consumers seem to be borrowing and spending more regardless of how much or how little confidence they have in the economy.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. In 1985, the index stood at 100.
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