Tumbling oil prices and a rebounding stock market helped ease U.S. consumers’ economic jitters in August, bringing a halt to the downward spiral in consumer confidence that has persisted throughout 2008, according to the Consumer Attitudes and Spending by Household Index by RBC Capital Markets (New York).

Overall, consumer confidence rose 19.2 points in August, as worries over their economic prospects, current conditions and investing eased. As a result, the CASH Index for August stood at 33.8, compared with 14.6 in July—which represented an all-time low since the index’s inception in 2002.

“Consumer sentiment bounced back due to a moderation in the prices of gasoline and oil as well as a modest rebound in the equity markets,” said T.J. Marta, economic and fixed income strategist for RBC Capital Markets. “However, the ongoing decline in house prices, continued tight credit conditions, and soft jobs market indicate that while sentiment might be in the process of bottoming at a very depressed level, it has not likely begun an upward trend. Historically, sentiment indicators can remain depressed during extended economic slowdowns, and they remained so for more than two years around the 1980-1981 and 1990-1991 recessions.”

Based on a national survey, the August CASH Index found that nearly one in three consumers (29 percent) believed their personal financial situation would be stronger in six months, compared with 25 percent in July. However, more consumers believed their local economy would be weaker (26 percent) than stronger (23 percent) in six months, indicating the tenuous nature of consumer expectations.

One-third (33 percent) of consumers rated their personal finances as weak, down from 37 percent in July. Consumers’ evaluations of their local economy showed a similar trend: 42 percent rated it as weak, down from nearly half (48 percent) in July.
Consumers’ attitudes regarding both stock and real estate investments also improved in August. Nearly three in 10 (28 percent) believed the next 30 days would be a good time to invest in the stock market, versus 24 percent in July. Four in 10 (41 percent) believed August would be a good time to buy real estate, versus 35 percent in July.

Over the course of the year, consumers’ attitudes regarding job security and job-loss experience have softened substantially, indicating the depth of current economic woes. [October 2008 PET AGE]