Confidence bounce | FT Alphaville

Confidence bounce

It was just last October that we mockingly called it the Conference Board consumer “confidence” survey after it plummeted back down to 2009 levels.

Seems we can lose the irony quotes now:

The Conference Board Consumer Confidence Index®, which had decreased in January, increased in February. The Index now stands at 70.8 (1985=100), up from 61.5 in January. …

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer Confidence, which had declined last month, posted a sizeable improvement in February.  The Index is now close to levels last seen a year ago (Feb. 2011, 72.0.). Consumers are considerably less pessimistic about current business and labor market conditions than they were in January. And, despite further increases in gas prices, they are more optimistic about the short-term outlook for the economy, job prospects, and their financial situation. ” …

Consumers’ assessment of current conditions was more favorable in February. Those claiming business conditions are “good” increased slightly to 13.3 percent from 13.2 percent, while those claiming business conditions are “bad” decreased to 31.2 percent from 38.3 percent. Consumers’ appraisal of the labor market was also less pessimistic. Those stating jobs are “plentiful” increased to 6.6 percent from 6.2 percent, while those saying jobs are “hard to get” decreased to 38.7 percent from 43.3 percent.

It was the best release from an otherwise mixed morning of US economic indicators, as the Case-Shiller Index registered a further decline in December and durable goods orders also disappointed. The permanent caveat for Case-Shiller is that it operates with a big lag, reporting a three-month average based on home sales closed in those months — meaning contracts signed a couple of months earlier.

So the December report is capturing some activity from as far back as August and September. Even so, the index showed that the pace of decline was slowing — see Calculated Risk for more. As for consumer goods, they declined in January after a strong fourth quarter, so we’ll wait to see if this report is an anomaly or signals a worse start to the year than everyone thought.

The good confidence numbers have mostly been influenced, probably, by the last two employment reports, and possibly also by the unexpectedly early and painless agreement to extend the payroll tax cut and jobless benefits through the end of the year.

The S&P was up 0.35 per cent at pixel time, hitting a new post-recession high of 1372, though we’re not suggesting this has anything to do with the indicators mentioned above.

Related links:
US consumer “confidence” at recessionary levels – FT Alphaville