The consumer confidence index rose by a larger than expected 6.7 percentage points in August. This increase was hyped in an NYT article because of the importance of consumption in the economy. It is worth noting that most of the rise in the index was attributable to a 10.1 percentage point increase in the expectations index. This index is much more volatile than the current conditions index and has little relationship to spending. Therefore it provides little information about the direction of consumption spending.
--Dean Baker
