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Economy in Brief

Consumer Confidence Recovered A Bit
by Tom Moeller November 25, 2008

The Conference Board reported that its November index of consumer confidence recovered a small piece of an October collapse. The rise to a level of 44.9 followed an October decline to 38.8. Consensus expectations had been for a roughly unchanged reading of 38.1.

During the last ten years there has been a 79% correlation between the level of consumer confidence and the y/y change in real consumer spending.

This month's rise reflected a decrease in the percentage of respondents expecting business conditions to worsen in six months. The latest level did, however, remain near the highest since the credit crunch of 1980. A small 11.4% expected improvement in conditions. More jobs were expected by just 9.2% of respondents while a near-record 17.7% foresaw less income.

The present conditions index fell even further to the lowest level since 1992. Jobs were seen as hard to get by 37.2% of respondents, the highest since 1993 and jobs were seen as plentiful by just 8.8%. Business conditions were seen as good by just 9.9%, the lowest since 1991. Those who thought conditions were bad rose to 40.3%, also the highest since 1992.

Expectations for the inflation rate in twelve months fell further 5.9%, the lowest level since February.

The Federal Reserve announced on Tuesday that it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs). The text of the announcement is available here.

Conference Board  (SA, 1985=100) November October Y/Y % 2007 2006 2005
Consumer Confidence Index 44.9 38.8 -48.9 103.4 105.9 100.3
  Present Situation 42.2 43.5 -63.5 128.8 130.2 116.1
  Expectations 46.7 35.7 -32.4 86.4 89.7 89.7
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