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Consumer Confidence Beats Expectations - Finally!

After a few rough months, consumer confidence has finally rebounded sharply after peaking in May. With the general economic situation much improved over the last 3-4 months, the confidence of consumers has been of the main laggards in the Leading Economic Indicators. Indicators that were up 6% on a annualized basis would've been significantly higher had consumer confidence been up to match the economic reality.

The August report showed a significant jump over July from 47.4 to 54.1 The main gains took place in the Expectations Index while the Present Situation Index saw a very slight improvement. Its not surprising to see expectations soar to highs not seen since the recession started in Dec 2007, but its still disappointing to see consumers so gloomy about the present situation. A reading below 25 is absurdly low. I'd look for continual improvements throughout the next year unless the media can convince us otherwise.

  • The Conference Board Consumer Confidence Index ®, which had retreated in July, rebounded in August. The Index now stands at 54.1 (1985=100), up from 47.4 in July. The Present Situation Index increased slightly to 24.9 from 23.3 last month. The Expectations Index improved to 73.5 from 63.4 in July.
  • Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend. The Present Situation Index increased slightly, mainly the result of an improvement in consumers' assessment of the job market. The Expectations Index improved considerably and is now at its highest level since December 2007 (Index, 75.8). Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations. And, as long as earnings continue to weigh heavily on consumers' minds, spending is likely to remain constrained."


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