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Economy in Brief

U.S. Consumer Confidence Declines
by Tom Moeller June 29, 2010

The Conference Board indicated that consumer confidence wavered this month. Their consumer confidence index fell 15.6% m/m to 52.9 and gave up the prior two months' increase. Nevertheless, confidence remained improved from last year. Consensus expectations had been for a relatively unchanged June reading of 62.9. During the last ten years there has been an 82% 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.

The expectations component of confidence fell 15.8% m/m but remained more-than-double the recession low.  Consumers expect the inflation rate in twelve months to be 5.2%, about as they have for 12 months, down from the 2008 high of 7.7%. Interest rates in twelve months were expected to be higher by a lessened 49.6% of respondents and an increased 15.0% expected rates to fall. A greatly lessened 25.8% of respondents expected stock prices to rise and an increased 36.0% expected prices to fall.

Consumers' assessment of the present situation dropped 14.4% m/m and the level was near last year's average. Jobs were seen as hard to get by a slightly increased 44.8% of respondents but jobs were seen as plentiful by only 4.3%. That was up just slightly from the series' historic low of 3.1% reached in November. A diminished 8.0% of respondents saw business conditions as good while 42.4% saw them as bad.

Just 1.9% of those surveyed plan to buy a home during the next six months. Also down m/m to 22.9% were those who plan to buy a major appliance, versus 30.9% who planned to buy one back in 2007. A new low of 3.7% plan to buy an automobile and just 1.2% plan to buy a new one, also a new low.

The Folly of Currency Pegs from the American Enterprise Institute is available here.

Conference Board (SA, 1985=100) June May April Y/Y 2009 2008 2007
Consumer Confidence Index 52.9 62.7 57.7 7.3% 45.2 57.9 103.4
  Present Situation 25.5 29.8 28.2 2.0 24.0 69.9 128.8
  Expectations 71.2 84.6 77.4 8.7 59.3 50.0 86.4
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