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Economy in Brief

U.S. Consumer Confidence Gains M/M
by Tom Moeller November 24, 2009

Consumers were distressed this past winter. Malaise is the best word to describe consumer confidence since then. The Conference Board indicated that consumer confidence during November rose just 1.6% from October following sharp declines during the prior five months. Though the level of confidence is up sharply from this winter's low, it has moved sideways since the spring. 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 slipped this month and was near the historic low. It remained off by almost two-thirds from one-year earlier. Jobs were seen as hard to get by 49.8% of respondents and jobs were seen as plentiful by only 3.2% which was near the series' historic low. Business conditions were seen as good by just 8.1% and that also was near the series' low. Consumers who thought business conditions were bad rose slightly to 45.7%. While off somewhat from its high, the reading was still nearly the highest since 1983.

The expectations component of confidence recovered a piece of its large October decline and the index remained near the highest level since late-2007. Fewer expected business conditions & employment to improve but a large deterioration from here also was not expected. Expectations for the inflation rate in twelve months held stable at 5.3%, 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 51.3% of respondents, while a reduced 12.9% expected rates to fall. A greatly increased 36.3% of respondents expected stock prices to rise.

Consumers continued to manage their spending plans cautiously. A reduced 2.0% plan to buy a home during the next six months while just 23.2% 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.

b>Housing's Great Fall: Putting Household Balance Sheets Back Together Again from the Federal Reserve Bank of St. Louis is available here

Conference Board (SA, 1985=100) November October September Y/Y % 2008 2007 2006
Consumer Confidence Index 49.5 48.7 53.4 10.7 57.9 103.4 105.9
  Present Situation 21.0 21.1 23.0 -50.4 69.9 128.8 130.2
  Expectations 68.5 67.0 73.7 48.3 50.0 86.4 89.7
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