The Conference Board released its Consumer Confidence Index this week, and it rose to 50.2 from a revised 48.6 in September. September’s index was the lowest since February and was down from 53.2 in August. A reading of 90 indicates a healthy economy and the last time that level was reached was in December 2007, before the recession began. The indexes lowest point of 25.3 was reached in February 2009. The index measures how shoppers feel about business conditions, the job market and the next six months. One component of the index, measuring how shoppers feel about the economy now, increased .6 to 23.9 in October. Another part assesses consumers’ outlook over the next six months, and that improved 2.3 to 67.8. “Consumer confidence … is still hovering at historically low levels,” Lynn Franco, Director of The Conference Board Consumer Research Center, said in a statement. “Consumers continue to be quite concerned about the short-term outlook. Both present and future indicators point toward more of the same in the coming months.”

The National Association of Realtors announced that home sales increased by 10% to a seasonally adjusted annual rate of 4.53 million in September. Analysts had only expected a gain of 4.39 million. The price of existing homes decreased 2.4% to a median price of $171,700. This may be what caused the home sales increase. Distressed sales accounted for 35% of all sales, compared to 34% in August and 29% in Sept. 2009. Home sales are 19% below the 5.6 million units recorded in the beginning of the recession in September 2009. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” said Lawrence Yun, Chief Economist at NAR.

The Labor Department announced that new unemployment claims dropped 23,000 to 452,000 last week, still 2,000 more than analysts had expected. The previous week was revised up to 475,000 from a prior estimate of 462,000. The four-week moving average of new claims dropped 4,250 to 458,000. The claims level is “completely unhealthy at this stage of a recovery, further reinforcing the idea that this recovery is anemic, jobless and insufficient,” wrote Dan Greenhaus, Chief Economic Strategist with Miller Tabak, in a research note.

The National Retail Federation released a survey conducted by BIGresearch about the upcoming holiday spending. The results were positive with only 61.7% of shoppers saying the economy will negatively impact their spending this holiday season, a 3.6% drop from last year. Overall, consumers plan to spend only 1% more this holiday season, or $688.87. 41.8% of shoppers ranked sales or price discounts as the most important factor which declined from 43.3% last year. The percentage who considered customer service the more important factor rose to 5.3% from 4.4%. Merchandise quality also increased in its importance for 12.7% of shoppers, up from 11.8%. 57.1% of people are more willing to self-indulge, planning to use holiday sales to purchase for themselves, up from 52.9% last year.

The Commerce Department released the housing report this week and starts rose 0.3% last month to a seasonally adjusted 610,000 annualized units. August starts were also revised higher to 608,000 units from the 598,000 previously reported. This is above the June and July average of 544,000. This may be a sign that the sector is leveling out after the removal of the stimulus measures. Housing starts are “up from 530,000 units at the trough in the first quarter of 2009 but it is still extremely low by the standards of the last 50 years. In fact, the rate of new construction is so low that there is barely any net growth in the U.S. housing stock these days,” said William Dudley, President of the New York Fed, in a speech.

The Federal Reserve announced that production dropped 0.2% compared to August, although it was up 5.4% from September 2009. Economists were expecting a 0.2% increase. “U.S. manufacturing output contracted by 0.2% in September, illustrating that the previously robust recovery in the factory sector is definitely behind us now and this could even be the start of a renewed downturn,” said Paul Ashworth, Senior U.S. Economist at Capital Economics. The biggest decrease came from appliances, furniture and carpeting as well as from energy, both of which saw 1.9% decreases. In the third quarter, U.S. industrial production rose at an annualized 4.8% rate, slower than the approximately 7% growth reported in the first and second quarters.

Investor’s Business Daily and TechnoMetrica Market Intelligence announced the results of their IBD/TIPP Economic Optimism Index. Consumer confidence rose 2.4 percent to 46.4 in October buoyed by stock market gains and optimism that next month’s elections will result in changed policy that may boost job creation. Readings above 50 indicate optimism. The index is now 0.2 points below its 12-month average of 46.6, and 2.0 points above the 44.4 level IBD reported in December 2007 when the recession began. “Our data clearly show that, while disappointed with federal policies, Americans are looking forward to change in 2011 that will result in material improvement in their finances and in the economy,” said Terry Jones, Associate Editor of Investor’s Business Daily. “That could spell big trouble for incumbents on election night.” The index’s personal financial outlook indicated consumers were more upbeat, increasing .6% to 53.1.

The Social Security Administration’s Inspector General issued a new report saying that more than 89,000 stimulus payments of $250 each went to people who were either dead or in prison. Approximately $18 million went to 72,000 deceased and $4.3 million went to more than 17,000 prison inmates. The report estimates that a little more than half of those payments were returned. The payments, which were part of last year’s massive economic recovery package, were meant to increase consumer spending to help stimulate the economy. Most of the inmates, it turns out, were eligible to get the payments because they were newly incarcerated and had been receiving Social Security before they were locked up.

The Labor Department announced that unemployment remained steady at 9.6% as private employers shed 95,000 jobs in September. While it wasn’t expected that there would be a dramatic decrease in unemployment last month, state and local governments dropped 159,000 jobs (a bad trend many expect to accelerate) which swamped a 64,000 gain in business payrolls. Meanwhile, revised July and August figures showed bigger job losses than previously estimated. The unemployment rate has been higher than 9.5% for 14 straight months, the longest stretch since the 1930s. “The economy is slogging along,” said Jerry Webman, chief economist at OppenheimerFunds. “We have a ways to go before we have an economic expansion that people are going to find satisfying and encouraging.” The 64,000 gain in private sector hiring came from health care and temp positions, “which aren’t ingredients for a robust recovery,” said Doug Roberts, chief investment strategist at ChannelCapitalResearch.com. Private service firms added 86,000 jobs, but goods producers cut 22,000.

A panel of economists including New York Times columnist Paul Krugman, Harvard’s Martin Feldstein and Goldman Sachs Chief Economist Jan Hatzius predicted several more years of pain for the United States. They agree that unemployment will remain high far longer than 2014, when White House and congressional economists have predicted a jobs improvement, and they agreed that policymakers have failed to adequately stimulate the economy, and that more needs to be done. “It’s going to take many years before you get back to anything approaching full employment, and 2014 is probably too early,” said Hatzius, speaking at a conference held at the Newseum in Washington. Some on the panel predicted unemployment will tick upward before it heads lower. Feldstein predicted that housing prices could fall even further, especially as more underwater homeowners give the banks the keys to their homes, increasing the supply of available ones. “When that happens, it hurts consumer confidence and it makes it much harder for people to move where the jobs are,” Feldstein said. “Then, I think (consumers) have to stay and suffer it out, and can’t move where they have a better chance of getting a job.”

Home sales may improve shortly according to The National Association of Realtors pending home sales index. The index jumped to 82.3 in August from 78.9 in July. Pending sales reflect contracts signed between home buyers and sellers. Lawrence Yun, Chief Economist of NAR, said ultra-low interest rates are drawing buyers back into the market, though the housing sector is still subdued. A year earlier, the pending home sales index stood at 103.0. “The pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence,” Yun said.

The Institute for Supply Management reported that the services index increased 1.7 to 53.2 in September, an increase from what economists expected. The services sector accounts for more than two-thirds of U.S. economic activity. A reading above 50 indicates expansion. The report also indicated an increase in employment to 50.2 in September, up from 48.2 in August. New orders also increased to 54.9 from 52.4. This is a good sign for the economy as we go into the holiday season.