Ahead of the Bell: Consumer Confidence

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Consumer confidence held steady in September, experts predict, suggesting fears about volatile financial markets and housing problems may be easing.

At 10:00 a.m. EDT Tuesday, the Conference Board is scheduled to issue its monthly survey of consumer sentiment. The consensus estimate of Wall Street economists surveyed by Thomson/IFR is 104.5, slightly lower than August s 105.0 reading. Economists latest estimates ranged from 100 to 106.

Wall Street monitors such data closely since consumer spending accounts for two-thirds of U.S. economic activity.

Consumers were concerned in August due to a softening in the labor market and continued subprime housing woes, the Conference Board said.

The survey is based on a representative sample of 5,000 U.S. households to measure consumer sentiment on present economic conditions and the spending outlook for the next six months. In 1985, the consumer confidence index stood at 100, according to the board. Changes of 5 points in the index are considered significant.

Consumers have had to deal with high gas prices, a deep housing slump and problems in the credit markets, which investors worry could spread and lead to a recession.

The Federal Reserve took action earlier this month and sliced a key interest rate by one-half a percentage point to 4.75 percent for the first time in more than four years.

While the move by the Fed won t cure the housing market s problems, it could help prevent the economy from being thrown into a recession. Lower rates tend to boost borrowing, spending and investing by consumers, which could energize economic activity.

That s good news for the nation s retailers, such as Wal-Mart Stores Inc., Target Corp. and Kohl s Corp., which have struggled in recent months amid slowed consumer spending.

Target on Monday cut its forecast for September same-store sales growth. Same-store sales, or sales at stores open at least a year, is an important indicator of retailer performance, as it measures sales at existing stores rather than newly opened ones

In a recorded message, Target reduced its growth projection to a range of 1.5 percent to 2.5 percent, versus a previous forecast of 4 percent to 6 percent.