Consumer Confidence Hits Six-Year High

Americans' confidence in the economy rebounded in July, according to the Consumer Confidence Index released yesterday by the Conference Board. The Index now stands at 112.6, up from 103.9 in June. The Present Situation Index, which measures how people feel about current conditions, increased to 139.2 from 127.9 in June. The Expectations Index, which their confidence that things will get better, rose to 94.8 from 87.9.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "The rebound in Consumer Confidence has catapulted the Index to its highest reading in nearly six years (August 2001, 114.0). An improvement in business conditions and the job market has lifted consumers' spirits in July."

What It Means to You

The Consumer Confidence Index is a lagging indicator. This means that most people don't really realize what is happening with the economy until after it has already happened. It could be that consumers are responding to the boost in the economy reported in the Q1 GDP report.

However, if you look at the chart, the Consumer Confidence Index has been declining since February. A one-month reading that is suddenly so much higher than the trend could be a one-time aberration, not the beginning of a new trend. Wait until next month's report before jumping to any conclusions.

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