Speaking on Monday after the rejection of the bailout plan by the House of Representatives, Treasury Secretary Hank Paulson said: I and my colleagues at the Fed and the SEC continue to address the market challenges we are facing on a daily basis. I am committed to continuing to work with my fellow regulators to use all the tools available to protect our financial system and our economy. Our tool kit is substantial but insufficient. Therefore, I will continue to work with Congressional leaders to find a way forward to pass a comprehensive plan to stabilize our financial system and protect the American people by limiting the prospects of further deterioration in our economy.

The US Conference Board Consumer Confidence Index, which had improved moderately in August, posted a slight gain in September. The Index now stands at 59.8 (1985=100), up from 58.5 in August. The Present Situation Index decreased to 58.8 from 65.0 last month. The Expectations Index, however, increased to 60.5 from 54.1 in August. In related news, President Bush said in relation to the rejection of the $700 billion financial bailout plan by the House of Representatives on Monday:"As much as we might wish the situation were different, our country is not facing a choice between government action and the smooth functioning of the free market. We're facing a choice between action and the real prospect of economic hardship for millions of Americans. And for the financial security of every American, Congress must act."

The Consumer Confidence Survey is based on a representative sample of 5,000 US households. The monthly survey is conducted for The Conference Board by TNS, which is the world's largest custom research company. The cutoff date for September's preliminary results was September 23rd.

Says Lynn Franco, Director of The Conference Board Consumer Research Center said: "September's increase in the Consumer Confidence Index™ was due solely to an improvement in the short-term outlook. However, these results did not capture all of the tumultuous events in the financial sector this month, and until the dust settles a bit more, we will not know the full impact on consumers' expectations. Shocks, such as the 1987 crash, generally tend to have a temporary adverse effect on confidence, lasting on average two to four months, unless they result in significant job losses. Just as noteworthy, consumers' assessment of current conditions continues to indicate that the current economic environment remains quite weak."

Consumers' appraisal of current conditions eroded further in September. Those saying business conditions are "bad" increased to 34.2 percent from 32.7 percent, while those claiming business conditions are "good" declined to 12.5 percent from 13.7 percent last month. Consumers' assessment of the labor market continues to deteriorate. Those saying jobs are "hard to get" rose to 32.8 percent from 31.7 percent in August, while those claiming jobs are "plentiful" decreased to 12.2 percent from 13.5 percent.

Consumers' short-term outlook improved again, but overall remains grim. Those anticipating business conditions to worsen over the next six months declined to 21.3 percent from 25.2 percent, while those expecting conditions to improve rose to 13.5 percent from 12.0 percent.

The outlook for the job market also moderately improved. The percent of consumers anticipating fewer jobs in the months ahead declined to 26.8 percent from 30.0 percent, while those anticipating more jobs increased to 11.8 percent from 10.7 percent. The proportion of consumers expecting their incomes to increase in the months ahead decreased slightly to 14.2 percent from 15.4 percent.

Speaking on the bailout plan, President Bush said today:"I recognize this is a difficult vote for members of Congress. Many of them don't like the fact that our economy has reached this point, and I understand that. But the reality is that we are in an urgent situation, and the consequences will grow worse each day if we do not act. The dramatic drop in the stock market that we saw yesterday will have a direct impact on the retirement accounts, pension funds, and personal savings of millions of our citizens. And if our nation continues on this course, the economic damage will be painful and lasting.

And I know many Americans are especially worried about the cost of the legislation. The bill the House considered yesterday commits up to $700 billion taxpayer dollars to purchase troubled assets from banks and other financial institutions. That, no question, is a large amount of money. We're also dealing with a large problem. But to put that in perspective, the drop in the stock market yesterday represented more than a trillion dollars in losses."