Surveys have found that consumer confidence went up in August as consumers are beginning to believe that the US economy is poised for a recovery.
"The welcome bounce back in confidence this month was entirely due to consumers’ optimism about the future," said Lynn Franco, director of the group’s consumer research center. "However, continued optimism will depend on positive developments in the labor market."
Consumers showed growing optimism about the economy over the next six months, though their assessment of current conditions again deteriorated slightly. The Conference Board’s expectations index rose to 94.4 in August from 86.3 in July, while the present situation index declined to 61.6 from 63.0.
The next big hurdle the economy needs to surpass is the labor situation. Labor is always a lagging indicator, meaning that if we’re in a strong recovery, it may be as long as six months before we start seeing an uptick in new job creation. However, since the ecomomy has been engaging in a slow "jobless" recovery for some time now, it’s possible that the uptick in hiring will be more gradual than sudden.
Regardless of the shape of the recovery, any economic uptick is welcome news for the nation. The economy has been in the doldrums for nearly 2 years now, battered first by a post-inflationary downturn, then the September 11 attacks, then anthrax, then corporate scandals, then concerns over the war in Iraq. The economy is finally adapting to the status quo, and if consumers are feeling upbeat that means that the psychological barriers to economic recovery are beginning to come down.