Falling energy prices and better job prospects improved Americans sentiment on the state of the economy in September, sending an index of consumer confidence higher than analysts expected. The Conference Board, a business-financed research organization, said Tuesday that its consumer confidence index rose to 104.5 from 100.2 in August. The reading the highest since 107 in July following a decline to a nine-month low in August, when employment concerns dragged down consumer confidence. The Conference Board s present situation index, which measures how consumers feel about current economic conditions, rose to 127.7 in September from 123.9 the previous month. Its expectations index, which measures consumer outlook over the next six months, rose to 89.0 from 84.4 in August. A more favorable assessment of current conditions coupled with a less pessimistic short-term outlook boosted consumer confidence this month, said Conference Board research director Lynn Franco. One benefit to consumers over the past month has been the decline in energy prices. Average retail gasoline costs fell by 50 cents, or 17 percent, to $2.38 a gallon (3.8 liters), according to Energy Department statistics. That is more than 42 cents lower than a year ago, when the energy industry was struggling to recover from the impact of Hurricanes Katrina and Rita. Despite lower gasoline prices, analysts are concerned that the slumping housing market could hurt consumer confidence in the longer term. Franco warned that even though consumers concerns have eased, there is little to suggest a significant change in economic activity as we enter the final quarter of 2006. Economists closely watch consumer confidence indexes for clues on consumer spending, which accounts for two-thirds of total U.S. economic activity.
