By  on August 31, 2005

NEW YORK — Although consumer confidence rebounded in August, analysts and economists warned that higher fuel costs will eventually take their toll on shoppers' sentiments as well as their spending habits.

Economists expected the overall index to fall to 100.8 because of rising energy prices, a factor that led to the decline in the University of Michigan consumer sentiment survey on Friday. Instead, the Conference Board's Consumer Confidence Index rose to a reading of 105.6 in August from 103.6 in July. Its components also gained in August, with the Present Situation Index jumping to 123.6 from 119.3 and the Expectations Index inching up to 93.7 from 93.2.

One possible reason for the unexpected bounce is that the survey measured sentiment up to Aug. 23, which is before Hurricane Katrina landed near the Gulf Coastal ports in the surrounding Louisiana area.

The area is home to the Port of New Orleans and the Port of South Louisiana, raising concerns over higher prices for certain commodities and other goods in the aftermath of Katrina. The area houses seafood producers, as well as the storage of green coffee beans from Central and South America, suggesting that consumers will see higher prices in those segments down the road.

Oil platforms and refineries near the Gulf ports were also shut down from the storm. As a result, prices for light sweet crude with an October delivery date briefly hit over $70 a barrel in trading on the New York Mercantile Exchange Tuesday. Heating oil futures, as well as natural gas futures, also climbed higher, hinting that motorists will see an increase in prices at the pump and homeowners could feel the pinch of higher home heating bills this winter.

According to Jim Rice, retail analyst at Susquehanna Financial Group, the rise in fuel costs is "the topic of conversation among vendors" at WWDMAGIC at the Las Vegas Convention Center this week.

"They're trying to figure out what effect the higher energy costs will have on consumers," Rice said. "The vendors I've spoken with here are worried. They don't think we've really seen the impact yet, and some believe Katrina will mean [higher] home heating costs."

Rice also toured the Off-Price Show at the Sands Convention Center and noted, "The vendors there observed that many seem unwilling to buy anything unless they are absolutely positive that an item will sell."

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