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News > Jobs & Economy
Consumer confidence surges
Survey shows better employment outlook lifts attitude to highest point in two years.
July 27, 2004: 11:14 AM EDT

NEW YORK (CNN/Money) - The Conference Board's latest reading on consumer confidence posted a much stronger gain than expected in July, lifted by gains in the employment outlook.

Economic indicators
Consumer confidence

The survey released Tuesday put its index at 106.1, up from a June reading that was revised up to 102.8. Economists surveyed by forecast a the index would reach 102.0 in July, which would have been up slightly from June's original 101.9 reading.

July marked the fourth straight month of gains for the index and put it at the highest level since June 2002.

"The spring turnaround has been fueled by gains in employment, and unless the job market sours, consumer confidence should continue to post solid numbers," said Lynn Franco, director of The Conference Board's Consumer Research Center.

Most of the gains came in the Expectations Index, a component of the overall index that measures consumers' outlook six months from now. That jumped to 105.8 from 100.8 in June. The Present Situation Index posted a more modest gain, edging up to 106.5 from 105.9 in June.

In the research group's survey of 5,000 households, those saying jobs are "plentiful" rose to 19.8 percent from 18.3 percent, while those surveyed claiming jobs are "hard to get" was virtually unchanged at 26.0 percent, compared to 26.2 percent in June.

In terms of their employment outlook, 13.1 percent of those surveyed expect fewer jobs to be available six months from now, down from 16.8 percent. But those anticipating more jobs to become available also eased to 19.4 percent from 19.9 percent.

Consumers unfazed

Economists said that some disappointing economic reports since the beginning of June that were of concern to the markets made little impression on the average consumer.

"The bedrock of consumer spending and confidence is employment," said Sung Won Sohn, chief economist for Wells Fargo bank. "The expectations of more jobs has boosted consumer confidence."

Sohn and Mark Vitner, senior economist with Wachovia Securities, both said they expect the improving consumer outlook to translate into strong consumer spending going forward, which in turn should help keep the economy growing into the fall.

"I think spending will be pretty solid the rest of the year," said Vitner. "The August numbers will be important due to back-to-school sales."

Those surveyed who believe current business conditions are "good" was relatively flat, at 25.6 percent compared to 25.8 percent in June. But there was an increase in those claiming conditions are "bad," up to 19.1 percent from 17.4 percent.  Top of page

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