The Conference Board compiles a survey of consumer attitudes on present economic conditions and expectations of future conditions. Five thousand consumers across the country are surveyed each month. While the level of consumer confidence is associated with consumer spending, the two do not move in tandem each and every month. Why Investors Care
| Released on 9/30/08 For Sep 2008 | ||||||||||||
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Highlights
Consumer confidence continues to edge up from record lows but labor market indications, the special strength of the Conference Board's consumer confidence report, point to trouble for September payrolls. The consumer confidence index rose 1.3 points in September to 59.8, led by a sizable 6.4 point gain in the expectations component to 60.5. Historically at the deepest depths of downturns, a rise in expectations points to overall improvement in the months ahead.
But the bad news is in jobs. Those saying jobs are currently hard to get rose 1.1 percentage points to 32.8 percent with those saying jobs are plentiful falling 1.3 percentage points to 12.2 percent. But, again, on the outlook, results are positive with more saying jobs will become more plentiful six months from now (11.9% Sep vs 10.7% Aug) and many fewer saying there will be fewer jobs (26.8% vs 30.0%). Expectations of improvement in business conditions is especially strong with more saying they will get better (13.5% vs 12.0%) and fewer saying they will get worse (21.3% vs. 25.2%).
The current assessment is much weaker, in line with downturns across economic indicators and the seizing up of the credit markets. Those saying business conditions are currently good fell to 12.5 percent, down 1.2 percentage points, with those saying they are bad rising 1.5 percentage points to 34.2. Given poor current conditions, consumers are further scaling back their purchasing plans, including plans for cars and appliances but especially for housing where an extremely thin 2.1 percent expect to buy a house within the next six months, down from 3.4 percent in August and pointing to even weaker traffic readings for the homebuilders' report.
Today's report is mixed but there are unquestionably indications of strength ahead, a reflection unfortunately of the depth of current conditions -- especially in the jobs market. Financial markets, frozen by credit market troubles and month-end pressures, showed no reaction to the report.
The Conference Board's consumer confidence index popped solidly higher in August, reflecting declining gas prices but not improvement in current labor conditions. The Conference Board's index climbed to 56.9 in August from 51.9 in July and posted its largest one-month gain since July last year. Nonetheless, the level remains quite low.
Consumer confidence Consensus Forecast for September 08: 55.0
Range: 50.0 to 65.3
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Typically retail sales will move in tandem with consumer optimism - although not necessarily each and every month. |
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