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Economy in Brief

U.S. Consumer Confidence Reverses Prior Deterioration
by Tom Moeller

Consumers' mood looks to be on the mend. For March the Conference Board reported that its consumer confidence index reversed much of the prior month's slide with a 13.1% increase to 52.5. The latest figure was in the middle of the range that's been in place last spring and the rebound outpaced the Consensus expectation for a rise to 50.0. 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 Conference Board data can be found in Haver's CBDB database.

Consumers' assessment of the present situation recovered all of the prior month's decline but remained near the historic low. Jobs were seen as hard to get by a diminished 45.8% of respondents but jobs were seen as plentiful by only 4.4%. That was up just slightly from the series' historic low reached in November. Also improved was the percentage of respondents who saw business conditions as good. The percentage of consumers who thought business conditions were bad fell to 42.8%, off nearly ten points from its peak one year ago.

The expectations component of confidence also improved m/m after the sharp February decline. Modestly improved expectations for business conditions, employment and income led the gain. Expectations for the inflation rate in twelve months also increased to 5.4% but that remained down from last year's high of 7.7%. Interest rates in twelve months were expected to be higher by an increased 53.9%, the highest since 2007 while 12.9% expected rates to fall. An increased 33.2% of respondents expected stock prices to rise and that was near the middle of the range since last spring.

An improved 2.8% of those surveyed plan to buy a home during the next six months. A diminished 25.8% plan to buy a major appliance versus 30.9% back in 2007. Only 3.8% plan to buy an automobile versus 6.0% in 2007 and just 1.4% plan to buy a new one. That was near the series' historic low.

Conference Board (SA, 1985=100) March February January Y/Y % 2009 2008 2007
Consumer Confidence Index 52.5 46.4 56.5 95.2 45.2 57.9 103.4
  Present Situation 26.0 21.7 25.2 18.7 24.0 69.9 128.8
  Expectations 70.2 62.9 77.3 132.5 59.3 50.0 86.4
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