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Economy in Brief

U.S. Consumer Confidence, Future and Present, Continues Downward
by Tom Moeller   June 28, 2011

The Conference Board reported that its June Index of Consumer Confidence fell 5.2% to 58.6. That followed a 6.5% May decline which was slightly-less-than reported initially. The latest figure contrasted with Consensus expectations for a reading of 61.0. During the last ten years there has been 45% correlation between the level of confidence and the three-month change in real personal consumption expenditures.

The expectations component of confidence fell a sharp 5.6% from May to the lowest level since October. Expectations for improved business conditions and employment in six months cratered to the lowest levels since early last year. Income expectations fell sharply as well. The turn in oil prices and the weak economy probably caused consumers to expect the inflation rate in twelve months to be 6.0%, the lowest since February. However, interest rates in twelve months were expected to be higher by 52.8% of respondents while just 14.9% expected rates to fall. A greatly lessened 26.4% of respondents expected stock prices to rise and an increased 38.0% expected decline. A very-much reduced 3.7% planned to buy a home within six months.

The present situations component of the consumer confidence index dropped 4.3% after a 2.2% May decline. Jobs were seen as hard to get by a slightly higher 43.8% of respondents, though that remained down from the November high of 48.8%. Business conditions were seen as good by a roughly stable 14.3% of respondents, double the February 2010 low, but 38.0% saw them as bad.

The Conference Board data can be found in Haver's CBDB database. The expectation figure is the AS1REPNA database.

How Do Households Respond To Uncertainty Shocks? from the Federal Reserve Bank of Kansas City can be found here.

Conference Board (SA, 1985=100) Jun May Apr Y/Y % 2010 2009 2008
Consumer Confidence Index 58.6 61.7 66.0 7.7 54.5 45.2 57.9
 Present Situation 37.6 39.3 40.2 31.9 25.7 24.0 69.9
 Expectations 72.4 76.7 83.2 -0.4 73.7 59.3 50.0
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