Global| Jul 28 2009U.S. Consumer Confidence Slips For A Second Month
by:Tom Moeller
|in:Economy in Brief
Summary
According to the Conference Board, consumer confidence fell slightly during July for the second consecutive monthly decline. Despite these shortfalls, however, confidence remained up sharply from the February low. The Conference Board [...]
According to the Conference Board, consumer confidence fell slightly during July for the second consecutive monthly decline. Despite these shortfalls, however, confidence remained up sharply from the February 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 the hardest last month and remained near the recent low. It remained off by almost two-thirds from a year earlier. Jobs were seen as hard to get by an increased 48.1% of respondents and jobs were seen as plentiful by 3.6% which was near the series' low. Business conditions were seen as good by just 9.1% and that was near the 1991 low. Consumers who thought business conditions were bad rose slightly to 46.3%, still near the highest since 1983.
The decline in the expectations component of confidence lagged just slightly with a 5.3% m/m decline. Still, the index remained near the highest level since late 2007. The percentage of respondents expecting business conditions to improve fell to 18.0% though that remained near the highest level since 2004. A much reduced 18.9% expected conditions to worsen. Only 15.0% of respondents expected any economic improvement to generate more jobs, more than double the percentage at the recent low.
Expectations for the inflation rate in twelve months fell back to 5.5%. That's down from last year's high of 7.7%. Interest rates in twelve months were expected by 51.9% to be higher while 16.6% expected rates to fall. A greatly increased 31.5% of respondents expected stock prices to rise.
Consumers certainly plan to manage their spending plans cautiously. Just 2.1% plan to buy a home during the next six months while 25.4% plan to buy a major appliance. That's versus 30.9% who did back in 2007. Only 4.5% plan to buy an automobile, versus 6.0% in 2007.
The Federal Reserve Board announced that it will soon begin a statistical study of household finances to update data collected at the outset of the economic downturn that began in late 2007.
| Conference Board (SA, 1985=100) | July | June | Y/Y % | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Consumer Confidence Index | 46.6 | 49.3 | -10.2 | 57.9 | 103.4 | 105.9 |
| Present Situation | 23.4 | 25.0 | -64.4 | 69.9 | 128.8 | 130.2 |
| Expectations | 62.0 | 65.5 | 45.2 | 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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