Tuesday, March 30, 2010
Today I digress from my recent Eurozone obsessions to compare the U.S. Consumer Confidence report (released today) to the PMI production surveys, a "soft" comparison of supply and demand. According to the Conference Board today:
The Conference Board Consumer Confidence Index, which had decreased in February, rebounded in March. The Index now stands at 52.5 (1985=100), up from 46.4 in February. The Present Situation Index increased to 26.0 from 21.7. The Expectations Index improved to 70.2 from 62.9 last month.This report is nothing to write home about. Consumer confidence remains at excruciatingly low levels.
Consumers’ assessment of current-day conditions was less negative in March. Those claiming conditions are "bad" decreased to 42.8 percent from 45.1 percent, while those claiming business conditions are "good" increased to 8.6 percent from 6.8 percent. Consumers’ assessment of the labor market was also less pessimistic. Those saying jobs are "hard to get" declined to 45.8 percent from 47.3 percent, while those saying jobs are "plentiful" increased to 4.4 percent from 4.0 percent.
In a post back in September, I argued that the expectations index is a better indicator of consumer spending. As such, the expectations component remains stronger than the composite, having rebounded to its level at the onset of the recession. However, like the composite index, the expectations index is moving rather laterally since May 2009.
Notice the bigger picture, with the Confidence survey illustrated alongside the ISM manufacturing and non-manufacturing surveys. The story remains to be very one-sided on the production side, which is more likely to drop back to meet weak consumer demand UNLESS THE JOBS MARKET IMPROVES...FOR REAL. See my previous post on the temporary effects of the Census hirings.
The underlying demand for goods and services, as determined by the 70% of the economy that is the Consumer, is weak, especially at this stage of the recovery (having already posted a positive quarter of economic growth). (By the way, if you want National Income data, the BEA offers an exceedingly easy way to download it here.)
These numbers challenge even the most optimistic of us all (that used to be yours truly).