Wednesday, June 13, 2012

USA Consumer Confidence Drops: Appraisal of Current Conditions Deteriorates

The Conference Board: Consumer Confidence Index

The May 2012 Consumer Confidence Index dropped -3.8 to 64.9 (preliminary) and a 4-month low, after reaching a 12-month high in February (71.6). Americans are pessimistic. The May reading is below the 74.6 monthly average from January 2005 through May 2012. However, this reading is well above the dismal October 2011 reading of 40.9, which was a 30-month low, the lowest since April 2009. Compared to the Pre-Great Recession peak of 111.9 in July 2007 consumer confidence continues at historically low levels regardless of the monthly ups and downs.

Says Lynn Franco, Director of The Conference Board Consumer Research Center, "Consumer Confidence fell in May, following a slight decline in April. Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook. However, consumers were more upbeat about their income prospects, which should help sustain spending. Taken together, the retreat in the Present Situation Index and softening in consumer expectations suggest that the pace of economic growth in the months ahead may moderate."

This is after the Thomson Reuters / University of Michigan Index of Consumer Sentiment was reported at a 55-month high in May, the highest since October 2007. Obviously there are two conflicting storylines between consumer "confidence" and "sentiment". I have not been able to reconcile these reports: one positive and one negative. Americans are comparatively giddy according to the other report: USA Consumer Sentiment Rises to 55-Month High! This results in the two indexes being a Bulls Survey vs. Bears Survey.

Consumer Confidence Index by Month The Consumer Confidence Index (CCI) reached a Post-Great Recession peak of 72.0 in February 2011. The Great Recession cyclical low was 25.3 in February 2009. The Pre-Great Recession peak was 111.9 in July 2007.

Consumer Confidence Index by Year For each year, the related months are averaged. The Great Recession low was in 2009 at a 45.2 average and the Post-Great Recession peak has been 2011 at a 58.2 average, which is a 4-year high. For the 5 months ended May 2012, consumer confidence is at a 5-year high of 67.2.

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