Consumer Confidence

Consumer Confidence is one of the big movers and shakers amongst economic measures. It's current to forward-looking, so it's one of the leading indicators of consumer spending. And since consumer spending is a huge chunk of GDP, good consumer confidence figures fill analysts and traders with hope for the future.

February's figures may be a hard act to follow. The Consumer Confidence Index hit a level of 70.4, which was a three-year high. The Present Situation Index increased 2.3 points to 33.4, and the Expectations Index increased 7.8 to a level of 95.1. And the Econoday-surveyed analysts aren't expecting march to follow last month's act. Instead, they're expecting to see the Consumer Confidence Index fall to a level of 64.0.

So, how do the actual numbers look? According to The Conference Board, the Consumer Confidence Index fell to 63.4 (falling below expectations). The Present situation Index improved, rising to 36.9, and the Expectations Index fell to 81.1. The Conference Board fully credits the decline in consumer confidence to the decline in future expectations: "Consumers' inflation expectations rose significantly in march and their income expectations soured, a combination that will likely impact spending decisions," said Lynn Franco, Director of The conference Board consumer Research Center.

Consumer Confidence

As economic measures go, this is one of those big movers and shakers. Traders like to see good confidence numbers, because consumer spending is a large (roughly 30%-50%) component of GDP. And how did we do?

The Conference Board's press release shows that we did pretty well. The Consumer Confidence Index increased to 70.4 from January's 64.8, while the Present Situation Index increased to 33.4 (from January's 31.1) and the Expectations Index increased to 95.1 (from January's 87.3). All of which is a fancy way of saying that people are confident, moreso about the future than about how things look right now.

That 70.4, though? That's a three-year high. That's not bad at all.

Of course, with all the excitement about Libya right now, the Middle East is once again overwhelming any good news from home. So don't be too surprised if we don't see the markets pop on this news.

Consumer Confidence. Is There Any?

The Conference Boards Consumer Confidence Index is a survey of some five thousand households, looking for information on consumer attitudes on the current economy and their expectations for the future. The Street likes this measure because, although consumer confidence does not have a causal link with consumer spending, the more confident consumers are about the economy the more likely they are to part with their hard-earned (and ever-debasing [1]) money. The index is benchmarked to 1995 equaling 100.

Now, consumer confidence hit a level of 49.9 in October. Analysts are looking for a further increase of 2.1 in November, bringing the level to 52.0. How did we do?

You can read the report on The Conference Board's website. In short form, the index improved to 54.1 (an unexpectedly good increase of 4.2). The Present Situation Index is still bleak (rising 0.5 to a level of 24.0), and the Expectations Index increased 6.7 to a level of 74.2. 43.6% believe business conditions are bad (up 1.3%), while only 8.1% of respondents believe business conditions are good (down 0.2%). Far more respondents also believe jobs are hard to et (46.5%, up 0.2%) than those who believe jobs are plentiful (4.0%, but up 0.5%). 16.7% of respondents expect business conditions to improve in the next six months (up 0.9%), and 15.5% of respondents expect the job market to improve (up 1.0%).

Overall, that's good news. Not great, but good. It shows that Americans are more confident about the future than the present, "but a man's reach should exceed his grasp, or what's a heaven for?"[2].

[1] Inflation. The more it rises, the less your current money is worth. Money that is worth less than it was is pretty much the definition of debased currency.
[2] Robert Browning