Surpassing economists' expectations, the Conference Board's consumer confidence index surged to 98.9 this month from 85.2 in October. Forecasters were looking for an increase to about 90.
"A decline of more than 40 cents in gasoline prices this month and the improving job outlook have combined to help restore consumers' confidence," observes Lynn Franco, director of the consumer research center at the Conference Board, a New York-based business research group. "While the index remains below its pre-Katrina levels, the shock of the hurricanes and subsequent leap in gas prices have begun wearing off just in time for the holiday season," she notes. Nevertheless, adds Franco, "holiday spending will be driven by the bargains consumers have come to expect."
This summer, prior to Katrina, the monthly index was around 105.
The confidence index, which is based on a representative sample of 5,000 U.S. households, is closely watched because consumer spending accounts for about two-thirds of all U.S. economic activity.