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Economy in Brief

Interconnected Global Labor Trends Impact Consumer Confidence
by Carol Stone June 30, 2004

Consumer confidence improved somewhat in Europe in June, as shown in the monthly Euro-Zone survey. The move is not substantial, just reversing May's 2-point deterioration, but it brought the Indicator back to -14, its lowest since November 2002. This move was driven by 2-point improvements in the components for "General Economic Situation" over both the last 12 months and the next 12 months and in the item, "Unemployment Expectations over the next 12 months".

This last item is particularly noteworthy for its close correlation with a similar series in the US consumer confidence data. As colleague Tom Moeller pointed out yesterday, a major factor in the jump in the Conference Board's confidence index for June was the decline in "jobs hard to get" to its lowest reading since September 2002.

It would be no surprise that within the European survey, unemployment expectations have a 99% correlation with overall confidence. But it is remarkable that overall consumer confidence in Europe has a 79% correlation with "jobs hard to get" in the US survey. The two total confidence series have an 87% correlation, as suggested in the accompanying graph, and the two employment series, 81%. World markets are intertwined, and the various regions' populations appear to view those market developments with so much the same perspective that it can be affirmed in simple statistical analysis.

  June 2004 May 2004 Apr 2004 June 2003 2003 2002 2001
Euro-Zone 12 Consumer Confidence Indicator, % Balance -14 -16 -14 -19 -18 -11 -5
Unemployment Expectations Next 12 Months, % Balance 31 33 31 40 38 26 14
US Conference Board Consumer Confidence, Index, 1985 =100 101.9 93.1 93.0 83.5 79.8 96.6 106.6
Jobs Hard to Get, % Replying 26.5 30.3 28.0 31.9 31.8 24.3 16.2
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