It’s not yet prompting a substantial acceleration of their spending, but American consumers are slowly starting to feel the worst of the economic downturn is behind them.

This story first appeared in the May 27, 2009 issue of WWD. Subscribe Today.

The Conference Board’s Consumer Confidence Index hit an eight-month high in May and has more than doubled since March, but most of the increase this month hinged on consumers’ belief that better times lay ahead.

The index surged to 54.9 percent this month from 40.8 percent in April, marking the third straight monthly improvement in shoppers’ moods. The index stood at 26.9 in March and 25.3 in February.

But consumers are still feeling much better about their future prospects than their present conditions. Of the index’s two components, the forward-looking Expectations Index rose to 72.3 from 51 as the Present Situation Index inched up to 28.9 from 25.5.

Ingesting that news, investors drove the S&P Retail Index up 4 percent, or 12.51 points, to 325.78. Retail stocks hit their low this year of 223.21 on March 6. The report also helped push the Dow Jones Industrial Average up 196.17 points, or 2.4 percent, to 8,473.49.

Although retail stocks historically have been among the first to improve in past slowdowns, a precursor of better results even when the economy has been mired in recession, a number of analysts believe retail stocks — which have marched forward 46 percent since early March — could be moving upward too quickly.

But the disappearance of easy credit and a reevaluation by consumers of how much they want to spend on fashion goods could mean retail stocks will behave differently this time and that the rally will lose steam, predicted Paul Lejuez, Credit Suisse analyst.

“I don’t believe it’s sustainable,” said Lejuez.

Many investors, he pointed out, are focused on the improving trend lines, seeing, for example, a 10 percent drop in comparable-store sales as a good thing if it comes on the heels of a 20 percent drop.

“I’m not one who gets very excited about seeing a better rate of decline,” Lejuez said. “We’ve reset to new levels. I don’t think we can get back to previous levels of spending. I think we are at a new normal.”

And even though the torrent of retail bankruptcies that the market feared late last year hasn’t happened, serious change is still afoot, he said.

“These companies are very slow to die,” Lejuez said. “It’s bound to happen. It just takes a long time.”

Retail stocks are up 16.7 percent so far this year and have outperformed the Dow Jones Industrial Average, which has fallen 3.5 percent.

Among the large number of retail gainers for the day were Dillard’s Inc., up 12.2 percent to $10.60; Chico’s FAS Inc., 10.2 percent to $8.85; American Eagle Outfitters Inc., 6.6 percent to $14.48, and Macy’s Inc., 5.9 percent to $11.85. Chico’s and American Eagle are due to report first-quarter results today.

Despite stock market gains, recent sales declines have been severe enough that, if continued, they would force further evolution on the industry. In the three months through April, sales at apparel and accessories stores fell 5.1 percent from a year earlier as department store sales declined 6 percent, according to government figures.

The calculus of home values also is being rewritten as first-quarter home prices fell 19.1 percent from a year earlier, according to the Standard & Poor’s/Case-Shiller Home Price Index released Tuesday.

“There remains a major de-coupling between consumer sentiment measures and recent consumer spending,” said Brian Bethune, IHS Global Insight’s chief U.S. financial economist in an analysis Tuesday.

Bethune said there was a “negative feedback loop of tight credit conditions” as banks work to rebuild capital and consumers don’t borrow as much because of weakness in the job and housing markets.

“This will keep consumer spending basically dormant in the second quarter, and we expect a below-trend increase in consumer spending in the third quarter,” he said.

Even so, shoppers are feeling better, and that should count for something — although the support is more emotional than financial for U.S. stores.

Lynn Franco, director of The Conference Board Consumer Research Center, said, “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. While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us.”

Even though the financial crisis has taken on a global flavor, that doesn’t mean all markets are feeling the same pressure.

In Germany, for example, despite threatening economic indicators and a daily diet of negative headlines, including the potential bankruptcies of major German companies such as Karstadt parent Arcandor and carmaker Opel, the German consumer climate remained stable in May.

In a report published today, Nuremberg-based market research firm GfK said “consumer propensity to buy remained virtually unchanged at a good level” in May. GfK is moreover forecasting this would continue in June for the fourth month in a row.