Global| May 26 2009U.S. Consumer Confidence Increases Again On Improved Expectations
by:Tom Moeller
|in:Economy in Brief
Summary
Consumers' attitudes are rising even further on expectations that the worst of the recession has passed. The May index of consumer confidence, reported by the Conference Board, improved for the third consecutive month and the latest [...]
Consumers' attitudes are rising even further on expectations
that the worst of the recession has passed. The May index of consumer
confidence, reported by the Conference Board, improved for the third
consecutive month and the latest two gains have been quite sharp.
Rising to its highest level since last September, the reading of 54.9
was up by more than half from the February low. Despite the gains,
however, the index level remained down by one half from the 2007 highs.
The latest figure was quite a bit firmer than Consensus expectations
for a reading of 43.0.
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.
Following a firm gain in April, the expectations component
again drove the rise in confidence this month with a 41.8% m/m rise.
The latest monthly increases have driven the index to the highest level
since late 2007. The percentage of respondents expecting business
conditions to improve jumped again to 23.1% which was the highest level
since 2004. A reduced 17.8% expected conditions to worsen. That
improvement was expected by 20.0% of respondents to generate more jobs,
nearly triple the percentage at the recent low.
Consumers' assessment of the current economic conditions has yet, however, to improve much at all. The present conditions index rose just modestly and remained near its recent low. It remained off by nearly two-thirds from a year earlier. Jobs were seen as hard to get by a slightly reduced 44.7% of respondents, still near the highest since 1992, and jobs were seen as plentiful by only 5.7% of respondents. Business conditions were seen as good by just 8.7% and that was near the 1991 low. Consumers who thought business conditions were bad rose slightly to 45.3%, still near the highest since 1983.
Expectations for the inflation rate in twelve months have been roughly stable since November at 5.6%. That's down from last year's high of 7.7%. Expectations about interest rates have started to increase with 47.0% of respondents expecting higher rates while 18.1% expect rates to fall. A greatly increased 35.8% of respondents expected stock prices to rise.
| Conference Board (SA, 1985=100) | May | April | Y/Y % | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Consumer Confidence Index | 54.9 | 40.8 | -5.5 | 57.9 | 103.4 | 105.9 |
| Present Situation | 28.9 | 25.5 | -61.1 | 69.9 | 128.8 | 130.2 |
| Expectations | 72.3 | 51.0 | 52.9 | 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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