Global| Jul 27 2010U.S. Consumer Confidence Lowest Since February
by:Tom Moeller
|in:Economy in Brief
Summary
The Conference Board indicated that consumer confidence continued its recent decline this month. Their consumer confidence index fell 7.2% m/m to 50.4 following a 13.4% June decline that was slightly less than reported initially. The [...]
The Conference Board indicated that consumer confidence continued its recent
decline this month. Their consumer confidence index fell 7.2% m/m to 50.4
following a 13.4% June decline that was slightly less than reported initially.
The July level was the lowest since February though it remained improved from
last year. Consensus expectations had been for a slightly smaller decline in the
index to 51.0. 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.
Overall, weaker expectations continued to drive overall confidence lower. The expectations component of confidence fell 8.4% m/m following June's 14.1% drop. Nevertheless the index remained up by more-than-double the recession low. Consumers expect the inflation rate in twelve months to be 4.9%, a material decline from recent months' expectations and down from the 2008 high of 7.7%. Interest rates in twelve months were expected to be higher by a lessened 46.7% of respondents and an increased 15.5% expected rates to fall. A greatly lessened 23.7% of respondents expected stock prices to rise and an increased 37.8% expected prices to fall.
Also, consumers' assessment of the present situation remained depressed and fell 2.6% this month after a 10.1% June drop. There's been an increased sense of poor business conditions. Jobs were seen as hard to get by an increased 45.8% of respondents and 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 slightly improved 9.0% of respondents saw business conditions as good while 43.6% saw them as bad.
Just 1.9% of those surveyed plan to buy a home during the next six months. Improved m/m, however, were the 28.5% who plan to buy a major appliance. That's still down from the 30.9% who planned to buy one back in 2007. A low 4.7% plan to buy an automobile and just 1.5% plan to buy a new one.
| Conference Board (SA, 1985=100) | July | June | May | Y/Y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Consumer Confidence Index | 50.4 | 54.3 | 62.7 | 6.3% | 45.2 | 57.9 | 103.4 |
| Present Situation | 26.1 | 26.8 | 29.8 | 12.0 | 24.0 | 69.9 | 128.8 |
| Expectations | 66.6 | 72.7 | 84.6 | 5.0 | 59.3 | 50.0 | 86.4 |
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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