"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Tuesday, January 25, 2011

Consumer Confidence

Last month, we saw evidence of a decline in consumer confidence.  The actual Consumer Confidence Index dropped to 53.3, while the Present Situation Index was at 24.9 and the Expectations Index was at 72.3.
For January, analysts were expecting a mild increase in the Consumer Confidence Index (up to 54.3), with no word on what they thought about the Present Situation Index and the Expectations Index.
How did we do?  Well, according to The Conference Board, we had a massive surge in confidence.  The Consumer Confidence Index went up to 60.6[1] (savagely beating expectations), while the Present Situation Index rose to 31.0 and the Expectations Index rose to 80.3.  People are still more pessimistic than optimistic about the economy, but the number of optimists are growing and the number of pessimists are shrinking.  More specifically:
  • Those saying business conditions are "good" increased to 9.8% of respondents, while those saying business conditions are "bad" remained pretty flat at 40.4%.
  • Those saying jobs are "plentiful" rose 100 bps to 5.2%, while those saying jobs are "hard to get" declined 260 bps to 43.4%.
  • Those expecting an improvement in business conditions over the next 6 months increased 220 bps to 19.0%, while those expecting business conditions to worsen declined 50 bps to 11.3%.
  • Those anticipating more jobs in the next 6 months increased 180 bps to 16.0%, while those expecting fewer jobs declined 170 bps to 17.5%.
  • Those expecting an increase in their incomes rose 150 bps to 11.4%.
So.  Not a lot of confidence yet, but definite improvement.
[1]  The last time we got near this number was May 2010, when the Consumer Confidence Index stood at 62.7.

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