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Consumer Confidence – STILL Not So Confident

Written by Lance Roberts | Jul, 26, 2013


“The Conference Board Consumer Confidence Index®, which had decreased in March, improved in April. The Index now stands at 65.4 (1985=100), up from 63.8 in March. The Present Situation Index increased to 39.6 from 37.5. The Expectations Index rose to 82.6 from 81.3.”   Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence, which had declined sharply in March, posted a modest gain in April. Consumers’ short-term outlook improved slightly, suggesting that the uncertainty expressed last month is easing. Inflation expectations, which had spiked, retreated somewhat in April. Although confidence remains weak, consumers’ assessment of current conditions gained ground for the seventh straight month, a sign that the economic recovery continues.”

On the surface this all looks pretty good…just don’t look too closely at the actual report.   The bulk of the responses were still very negative, however, the mathematics of the index combined to show a positive gain while the overall report was actually negative.    The biggest pools of responses were very negative and those dropped versus the very small pools of enthusiasm that increased.    For example;  the Consumers’ appraisal of present-day conditions, although mixed, did improve slightly in April, however, those stating conditions are “good” decreased slightly to 14.8 percent from 15.0 percent.  Those stating business conditions are “bad” also declined slightly to 36.4 percent from 36.6 percent.   The bigger decline was in those stating that business conditions were “bad” versus the much smaller pool saying things were “good”.   The same applies to the consumers’ assessment of the labor market which was reported as more favorable than last month. Those saying jobs are “hard to get” declined to 41.8 percent from 44.4 percent, while those stating jobs are “plentiful” increased to 5.2 percent from 4.6 percent.    Only 5.2% said jobs were plentiful – most of these were probably hunting jobs at McDonalds versus the 41.8% that were trying to find real jobs.    It’s all in the makeup of the math.

Overall, the report showed a slight uptick but still remains at VERY recessionary levels.   After two years of economic recovery the index should be closer to 100 versus 82.    Furthermore, while the mathematics of the index have combined to show a slight uptick it is still lower than it was just two months ago and the more important components of the index such as expectations are rolling over and the present situation index is still at very recessionary levels.  

The bottom line is that overall – the consumer, on the whole is hoping and praying that things will eventually get better but as of right now they still feel like they are in recession.

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