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Economy in Brief
U.S. FHFA House Price Index Rose Further in November
The FHFA House Price Index increased 1.0% m/m in November...
U.S. Energy Prices Are Mixed
The price of regular gasoline rose to $2.39 per gallon (-4.5% y/y) in the week ended January 25...
U.K. Retail Survey Shows Extreme Weakness
The CBI U.K. retail volume survey shows dramatically weakened data for January and for the February outlook...
Texas Manufacturing Activity Weakens Further During January
The Dallas Fed reported that its Texas Manufacturing Outlook Survey General Business Activity Index fell to 7.0 during January...
Chicago Fed National Activity Index Improves During December
The Federal Reserve Bank of Chicago's National Activity Index increased to 0.52 during December...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller February 24, 2009
The
Conference Board reported that its February index of consumer
confidence fell to another record low. The decline to a
reading of 25.0 was a one-third drop versus January and it lowered
confidence by three-quarters from the July 2007 peak. The
February decline was much deeper than Consensus expectations.
The Conference Board data can be found in Haver's CBDB database.
During the last ten years there has been an 83% correlation between the level of consumer confidence and the y/y change in real consumer spending.
The present conditions index fell 28.6% from the
January level and it was off more than three-quarters from a year
earlier.
Jobs were seen as hard to get by 47.8% of
respondents, the highest since 1992 and jobs were seen as plentiful by
only 4.4%. Business conditions were seen as good by just 6.8%
and that matched the 1991 low. Those who thought conditions
were bad rose to 51.1%, the highest since 1983.
Consumers' economic outlook continued to worsen as indicated by yet another decline in the expectations index. The figure fell by more than one-third from January and by more than one-half from last February. The percentage of respondents expecting business conditions to worsen in six months rose to 40.5%, the highest since 1974. Just 8.7% expected improvement in conditions. More jobs were expected by only 7.1% of respondents while a near-record 23.8% foresaw less income.
Expectations for the inflation rate in
twelve months have been roughly stable at the February level of
5.9%. That's down from last year's high of 7.7%.
Confusion about the interest rate outlook was evident by the fact that
roughly one-third of respondents expected higher interest rates while
one-third expected rates to fall. A separate question
indicated that 49.5% expected lower stock prices.
The decline in overall consumer confidence over the last year has been greatest amongst higher income earners. It has been fairly uniform by age group.
An Experimental Investigation of Why Individuals Conform from the Federal Reserve Bank of New York can be found here.
Prospects for Macro- and Financial Policy is a recent speech given by Gary H. Stern, President of the Federal Reserve Bank of Minneapolis and it available here.
Conference Board (SA, 1985=100) | February | January | Y/Y % | 2008 | 2007 | 2006 |
---|---|---|---|---|---|---|
Consumer Confidence Index | 25.0 | 37.4 | -67.3 | 57.9 | 103.4 | 105.9 |
Present Situation | 21.2 | 29.7 | -79.6 | 69.9 | 128.8 | 130.2 |
Expectations | 27.5 | 42.5 | -52.6 | 50.0 | 86.4 | 89.7 |