Consumer sentiment for September came in significantly higher than predicted, mostly due to falling gasoline prices.

Falling gasoline prices helped brighten the mood of American consumers in September, sending a barometer of consumer sentiment higher than analysts expected.

The New York-based Conference Board said Tuesday that its consumer confidence index rose to 104.5 from a revised reading of 100.2. in August. Analysts had expected the index to rise to 103. The reading, the highest since July’s 107, followed a big dip in August, when employment worries dragged down consumer sentiment.

The private research group’s Present Situation Index, which measures how shoppers feel now about economic conditions, rose to 127.7 from 123.9. Its Expectations Index, which measures consumers’ outlook over the next six months, rose to 89.0 from 84.4 last month.

“A more favorable assessment of current conditions coupled with a less pessimistic short-term outlook boosted consumer confidence this month,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. But she cautioned that “…even though consumers’ concerns have eased, there is little to suggest a significant change in economic activity as we enter the final quarter of 2006.”

Falling gasoline prices are causing the average American to feel better about the economy, and will translate into a much smaller loss in the midterm elections than the pundits are predicting. If the Democrats think that this election is going to resemble the midterm election in 1994, I think they have another thing coming.