Consumer confidence tops estimates

It's the economy, stupid

More Videos

Quick Vote

How has the housing crisis and mortgage meltdown affected you and your family?

• Our home lost value
• We can't sell our home
• We lost our home in foreclosure
• We got a deal on a new home
• It hasn't affected us at all

or View results

• Hiring holds steady
• Half of 'rescued' borrowers still default
• Job outlook gets gloomier
• Where the jobs are
• Where the jobs are

Issue #1: America's Money - Everyday on CNN

NEW YORK (CNNMoney.com) -- A key measure of consumer confidence rose in August and beat economists' expectations, according to a report issued Tuesday.

The board said its Consumer Confidence Index rose to 56.9, up from 51.9 in July. Economists had expected the index to rise slightly to 53, according to a consensus compiled by Briefing.com.

The results showed that consumers had a bleak view of the current economy, but harbored better hopes for the future. The Present Situation Index fell to 63.2 in August from 65.8 the prior month. But the Expectations Index rose to 52.8 in August from 42.7 in July.

"Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year," said Lynn Franco, director of The Conference Board Consumer Research Center, in a press release.

The index was based on a survey of 5,000 U.S. households conducted by TNS for the New York-based Conference Board, a business research organization. The index uses 1985 as its benchmark, setting the index at 100.

Any score above 50 means growth, while a score below 50 signals a decline.

While the August number rose month-to-month, the reading was still lower than in May, when it was 58.1. In June, the index plunged to 51.0 and edged up only slightly the following month to 51.9.

Consumer confidence was much stronger a year ago. In July 2007, the index stood at 111.9.

Many consumers seem to believe that the economy has bottomed out, said Robert Brusca, chief economist at Fact and Opinion Economics. But he noted that the index for August "was still a really weak reading" despite the "begrudginly better" increase.

"This report is still low," said Brusca. "Let's not make too much of the fact that we get a little bounce from month to month."

Consumers remained dismayed with the state of the economy, with 33.2% of households rating current business conditions as "bad," and 13.4% rating them as "good." Both of these August figures increased slightly from the prior month, when 32.6% rated the economy as "good" and 13.2% rating it as "bad."

Consumers were also not thrilled with the labor market, with 32.0% saying jobs are "hard to get" in August, up from 30.2% in July. Consumers who considered jobs "plentiful" slipped to 13.1% from 13.6%.

Looking forward, expectations improved, albeit slightly. The percentage of households expecting business conditions to worsen over the next six months dropped to 25.8% in August from 32.4% the prior month. And the percentage of respondents expecting conditions to get better rose to 11.9% from 9.2%.

Respondents were also less pessimistic regarding the job market, with 30.6% anticipating fewer jobs in six months, down from 37.3% in July. The percentage of households in six months expecting more jobs increased 10.5% in August from 8% in July. The proportion of consumers expecting their incomes to increase was virtually unchanged at 14.7% in August, compared with 14.3% in July.

"Declines in the Present Situation Index, both in terms of business conditions and the labor market, appear to be moderating," said Franco, director of The Conference Board Consumer Research Center, a press release. "The Expectations Index, which posted a significant gain this month, suggests better times may be ahead. However, overall readings are still quite low by historical standards and it is still too early to tell if the worst behind us."

On Monday, the national CNN/Opinion Research Corp. poll showed that Americans' perspective on the economy darkened over the last year. The poll showed that 75% of participants believe that the economy is in bad shape, compared to just 43% of respondents who had that view when the poll was conducted a year ago.