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Economy in Brief

U.S. Consumer Confidence Drops Off Sharply 
by Robert Brusca September 25, 2007

With the September Conference Board report we have a bit more of a dilemma on our hands. While the August job report was very weak as the month went on consumer confidence did not weaken from its earliest readings which were themselves weak. Both the weekly consumer comfort gauge and the preliminary University of Michigan report showed a firming in confidence that has continued. Now, in September, we get a big drop in confidence, the second in a row from the Conference Board measure. Neither the University of Michigan preliminary reading nor the weekly consumer comfort reports are in early agreement with this weakness. Moreover, the weekly jobless claims are lower despite the fact that the Conference Board report is supposed to be more labor-market centric than the others. We are left to ponder which of these reports really has the pulse of the nation and which of them has glommed onto pulse of the family dog.

The range data on the detailed components of the Conference Board index show us that this weakness is fairly widespread across expectations in the report.

Expectations are the weakest readings residing in the middle of their range at the 48th percentile. The present situation comes out in the top 25 percent of the range - nearly the top 20%.

Between the two present situation readings, the business conditions response is the weaker in its range at the 53 percent mark while employment is near the top 30% of its range.

Among the expectations components both the business and employment indexes are weak in their respective ranges, bottom 35% to 40%. But income, a more stable component, is holding up in the top third of its range.

The planned spending components are exceptionally weak. Plans to buy an automobile are in the bottom 15% of their range; plans to buy a house are in the bottom 5% of their range.

The Conference Board reading is weak. It is at its weakest point since an unusually sharp drop late in 2005. Since other measures have not gone along with this one, we will want to watch closely if the Conference Board is isolated or just early in its report of weakness.

Table of Comparison for Conference Board Survey
Overall Index Current Max Min Year Ago Pctile
Confidence Index 99.8 111.9 61.4 105.9 76.0%
Present Situation 121.7 138.5 59.7 128.3 78.7%
Expectations 85.2 110.2 61.4 91.0 48.8%
Present Situation Current Max/Oct'03 Min/Oct'03 Year Ago Pctile
Business Conditions 53.9 57.3 50.0 55.9 53.4%
  Good 25.7 29.7 13.6 27.3 75.2%
  Bad 17.9 31.0 14.5 15.6 20.6%
  Normal 56.4 61.5 53.1 57.1 39.3%
Employment 51.8 55.7 43.2 52.7 68.9%
Jobs Plentiful 25.7 30.3 9.9 26.2 77.5%
Not so Plentiful 52.2 60.2 50.7 52.9 15.8%
Jobs Hard To Get 22.1 35.1 17.9 20.9 24.4%
Expectations(6-mo) Current Max Min Year Ago Pctile
Business Conditions 51.9 58.0 47.8 53.1 40.4%
  Better 15.6 28.0 13.0 16.5 17.3%
  Worsen 11.8 20.0 6.2 10.3 40.6%
  Same 72.6 76.7 65.0 73.2 65.0%
Employment 47.3 53.0 44.2 49.1 35.6%
  More Jobs 13.3 22.2 10.8 14.7 21.9%
  Fewer Jobs 18.7 28.5 13.5 16.5 34.7%
  The Same 68.0 72.5 59.1 68.8 66.4%
Income 55.9 57.1 53.4 55.7 68.5%
  Increase 20.4 22.7 15.8 20.2 66.7%
  Decrease 8.6 13.4 7.2 8.8 22.6%
  Same 71.0 74.5 67.8 71.0 47.8%
Buying Plans:
Automobile Current Max Min Year Ago Pctile
  Yes 5.2 8.7 4.6 6.0 14.6%
  New 2.7 4.3 2.1 2.9 27.3%
House Current Max Min Year Ago Pctile
  Yes 2.7 4.5 2.6 2.9 5.3%
  New 0.7 1.7 0.5 1.0 16.7%
Major Appliance 29.7 35.3 25.0 27.5 45.6%
Buying index 81.4 107.7 74.3 98.4 21.3%
New Purchase Index 76.5 107.9 61.6 94.3 32.2%
      From Dec '01 'til Sep-07
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