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Economy in Brief

U.S. Consumer Confidence Moves Sideways After Spring Bounce
by Tom Moeller September 29, 2009

The Conference Board indicated that consumer confidence during September dipped from August. Though both figures were up sharply from the February low, the trend in the series has been roughly sideways since May. 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' assessment of the current economic conditions fell again this month and remained near the historic low. It remained off by almost two-thirds from one year earlier. Jobs were seen as hard to get by an increased 47.0% of respondents and jobs were seen as plentiful by 3.4% which was near the series' historic low. Business conditions were seen as good by just 8.7% and that also was near the series' low. Consumers who thought business conditions were bad rose slightly to 46.3%. While off somewhat from its high the reading still near the highest since 1983.

The expectations component of confidence slipped from August but the index remained near the highest level since late-2007. The percentage of respondents expecting business conditions to improve slipped to 21.3% though that remained near the highest level since 2004. A much reduced 15.0% expected conditions to worsen. That was off from the recent February high of 40.7%. An improved 17.9% of respondents expected economic improvement to generate more jobs, more than double the percentage at the recent low.

Expectations for the inflation rate in twelve months fell back to 5.2%, the lowest level since 2007 and down from last year's high of 7.7%. Interest rates in twelve months were expected to be higher by 48.8% of respondents, while 14.8% expected rates to fall. A greatly increased 35.4% of respondents expected stock prices to rise.

Consumers continued to manage their spending plans cautiously. Just 2.3% plan to buy a home during the next six months while 23.8% plan to buy a major appliance. That's versus 30.9% back in 2007. Only 4.4% plan to buy an automobile versus 6.0% in 2007. Just 2.1% plan to buy a new one.

Is The Financial Crisis Over? A Yield Spread Perspective from the Federal Reserve Bank of St. Louis is available here.

Conference Board  (SA, 1985=100) September August Y/Y % 2008 2007 2006
Consumer Confidence Index 53.1 54.5 -13.5 57.9 103.4 105.9
  Present Situation 22.7 25.4 -62.8 69.9 128.8 130.2
  Expectations 73.3 73.8 19.2 50.0 86.4 89.7
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