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Economy in Brief

U.S. Consumer Confidence Is Stable M/M But Still Low
by Tom Moeller  September 27, 2011

The Conference Board's September Index of Consumer Confidence showed stability following the harrowing August decline. The index actually ticked up slightly m/m to 45.4 following the nearly one-quarter August downdraft, which was lessened slightly. The latest figure remained near the lowest since April, 2009 and it was just short of Consensus expectations for a reading of 46.0. During the last ten years there has been 47% correlation between the level of confidence and the three-month change in real personal consumption expenditures.

This month, it was consumer's reading of the present economic situation that showed a m/m decline. The index's drop to 32.5 was to its lowest since January. The reading worsened as just 11.7% saw economic conditions as good but 40.4% felt they were bad. Jobs were seen as hard to get by an increased 50.0% of respondents, the highest since May, 1983.

The expectations component of confidence edged up m/m after the 30.0% August decline. The index level was off 44.6% versus its February peak. Twice as many respondents thought that business conditions would worsen as improve. There was an even greater disparity between those who thought employment would worsen and those who saw improvement. Only 13.3% felt their income would rise, the least since October.

Expectations for inflation in twelve months fell again m/m to 5.7% versus the peak of 6.7% three months ago. A much fewer 46.4% thought interest rates would rise, the least since November and slightly more respondents foresaw higher stock prices, but 48.3% expected a decline.

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

Conference Board (SA, 1985=100) Sep Aug Jul Y/Y % 2010 2009 2008
Consumer Confidence Index 45.4 45.2 59.2 -6.6 54.5 45.2 57.9
 Present Situation 32.5 34.3 35.7 39.5 25.7 24.0 69.9
 Expectations 54.0 52.4 74.9 -17.6 73.7 59.3 50.0
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