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Economy in Brief

U.S. Consumer Confidence Jumps Sharply With Improved Expectations
by Tom Moeller April 28, 2009

Consumers seem to be getting into a better mood which may translate into more spending. The April index of consumer confidence, reported by the Conference Board, improved sharply. Rising to its highest level since November, the reading of 39.2 was up by more than half from the February low. Lest there's too much excitement, however, the level of confidence remained down by more than half from 2007 average. The latest figure was quite a bit firmer than Consensus expectations for a reading of 29.0.

The Conference Board data can be found in Haver's CBDB database.

During the last ten years there has been an 86% correlation between the level of consumer confidence and the y/y change in real consumer spending.

Consumers' improved expectations drove the rise in confidence this month with a 63.9% rise from the March level. The percentage of respondents expecting business conditions to improve rose sharply to 15.6%, the highest level since 2007, but a reduced 25.3% still expected them to worsen. That improvement was expected by 13.9% of respondents to generate more jobs, double the recent low.

The present conditions index rose just modestly and remained near its recent low. It remained off by more than three-quarters from a year earlier. Jobs were seen as hard to get by 47.9% of respondents, near the highest since 1992, and jobs were seen as plentiful by only 4.5%. Business conditions were seen as good by just 7.6% and that was near the 1991 low. Those who thought conditions were bad fell slightly to 45.7%, still near the highest since 1983.

Expectations for the inflation rate in twelve months have been roughly stable since November at 5.9%. That's down from last year's high of 7.7%. Expectations about interest rates has started to increase with 38.8% of respondents expecting higher rates while 23.5% expect rates to fall. A greatly lessened 36.4% of respondents expected lower stock prices.

Are Fiscal Stimulus Funds Going to the "Right" States? from the Federal Reserve Bank of San Francisco is available here.

Conference Board  (SA, 1985=100) April March Y/Y % 2008 2007 2006
Consumer Confidence Index 39.2 26.9 -37.6 57.9 103.4 105.9
  Present Situation 23.7 21.9 -71.1 69.9 128.8 130.2
  Expectations 49.5 30.2 -1.0 50.0 86.4 89.7
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