Consumer Confidence Soars

This is great news. Despite the doom and gloom among economists and the media, the Conference Board today reported an unexpected surge in consumer confidence. In fact, the index reached its higher level since the collapse of Lehman Bros. in September that caused the credit market freeze.

For this month, the index reached 54.9, up from 40.8 in April. Expectations for the next six months rose to 72.3 from 51.0 in April. That's quite a leap.

While encouraging, the numbers are at odds with recent trends. Housing data in 20 major metropolitan areas declined in March by 18.7 percent, according to the Standard & Poor’s Case-Shiller Home Price Index that was released today. Earlier this month, the Commerce Department said retail sales fell 0.4 percent in April, following a 1.3 percent drop in March. Meanwhile the U.S. unemployment rate reached 8.6 percent in April.

Still, the Conference Board gave a rosy assessment of the state of the economy through the eyes of consumers:

"Consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months," Lynn Franco, Director of The Conference Board Consumer Research Center, said in a press release. "While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us."

Bold words. Let's hope she's right.