Global| Oct 27 2009U.S. Consumer Confidence Drops Again
by:Tom Moeller
|in:Economy in Brief
Summary
Earlier gains in consumer confidence have flagged with the continued run-up in unemployment. The Conference Board indicated that consumer confidence during October fell 10.7% from September. The decline was the fourth in the last five [...]
Earlier gains in consumer confidence have flagged with the
continued run-up in unemployment. The Conference Board indicated that
consumer confidence during October fell 10.7% from September. The
decline was the fourth in the last five months though confidence
remained nearly double this Winter's low. 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 49.6% 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 7.7% and that also was near the series' low.
Consumers who thought business conditions were bad rose slightly to
47.1%. While off somewhat from its high the reading still near the
highest since 1983.
The expectations component of confidence fell hard from September but the index remained near the highest level since late-2007. The percentage of respondents expecting business conditions to improve slipped to 20.8% though that remained near the highest level since 2004. Though down slightly m/m, an improved 16.3% of respondents expected economic improvement to generate more jobs, more than double the percentage at the recent low. However, that gain was not expected to generate much more income.
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 49.5% of respondents, while 15.8% expected rates to fall. A greatly increased 32.7% 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 just 23.3% 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 1.4% plan to buy a new one.
| Conference Board (SA, 1985=100) | October | September | Y/Y % | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Consumer Confidence Index | 47.7 | 53.4 | 22.9 | 57.9 | 103.4 | 105.9 |
| Present Situation | 20.7 | 23.0 | -52.4 | 69.9 | 128.8 | 130.2 |
| Expectations | 65.7 | 73.7 | 84.0 | 50.0 | 86.4 | 89.7 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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