By  on December 29, 2006

Consumer confidence rose unexpectedly in December to an eight-month high, but that still might provide little for retailers to cheer about following a disappointing holiday selling season.

Analysts said the overall outlook for the U.S. economy remains mixed, and it is still unclear how consumers will react in coming months to their ever-increasing debt levels, the weakening housing market and a mixed picture for employment. Most retailers also have been mum so far about their holiday results, waiting to discuss them until same-store sales are released Thursday.

For now, however, consumers seem to be in a buoyant mood. The Conference Board's Consumer Confidence Index rose to 109, up from an upward revised 105.3 in November. The gain resulted from improved results for the Present Situation Index, now at 129.9 from 125.4 last month, and the Expectations Index, now at 95.1 from 91.9. The survey results are tabulated from a sampling of 5,000 U.S. households, with Dec. 19 as the cutoff date for the preliminary results.

Some economists had expected the index to slip slightly from an unadjusted 102.9 last month. And even with the increase, they still weren't overly optimistic about the outlook.

"Despite the latest improvement in the index, there is little to suggest that the pace of economic activity in the final quarter of 2006 is anything but moderately better than its uninspiring performance earlier this year. Given the seesaw pattern in recent months, it is too soon to tell if this boost in confidence is a genuine signal that better times are ahead," said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.

In prior months, the index reflected consumers' pessimism about deteriorating labor conditions. In contrast, December's surge showed a more positive view of the outlook for jobs.

Consumers in the December survey who said jobs are "hard to get" fell to 21.2 percent from 22.1 percent last month, while those who said jobs are "plentiful" rose to 26.9 percent from 25.7 percent. To be sure, the outlook of consumers for the next six months reflects a more accurate read on the state of purchasing power since the overall confidence survey and its early cutoff date for preliminary results is considered a backward reflection of what consumers think and feel about the economy.

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