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

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Tuesday, July 26, 2011

Consumer Confidence

Consumer Confidence is The Conference Board's survey of three thousand households, looking for a consensus opinion about current and future economic conditions.  It's a pretty big market mover, because consumer transactions represent about one-third of GDP.  If consumers aren't confident, GDP is likely to decline.
Last month the consumer confidence index hit 58.5, and the Econoday-surveyed analysts are expecting a further decline to a level of 57.0.
We turn now to The Conference Board's press release "The Conference Board Consumer Confidence Index® Increases Slightly" which, as you may have guessed, indicates that the pessimism of the analysts was not justified.  The Consumer Confidence Index rose to 59.5, with consumer pessimism about current conditions (the Present Situation Index declined 0.9 to 35.7) being outweighed by increasing confidence about the future (the Expectations Index increased 3.8 to 75.4).  Consumers are specifically concerned about business conditions (those thinking they are good declined 0.3 to 13.4, while those thinking they are bad increased 0.6 to 39.0) and the job market (those thinking jobs are hard to get increased 0.9 to 44.1, while those thinking jobs are plentiful remained unchanged at 5.1).

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