| Consumer Confidence |
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Released On 8/30/2011 10:00:00 AM For Aug, 2011
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Consumer Confidence - Level | 59.5 | 45.2 | 52.5 | 45.0 to 59.0 | 44.5 |
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Highlights
The debt-ceiling drama and the S&P downgrade of the US did in fact pull down consumer confidence which fell a very steep 14.7 points in August to 44.5 for the lowest reading since April 2009 (May revised three tenths lower to 59.2). Weakness is concentrated heavily in the leading component which is expectations where the consumer's outlook on employment, business conditions and on income all fell. The expectations index, at 51.9, is also at its lowest level since April 2009.
The present situation component, at 33.3 for a 2.4 point loss, shows less deterioration though the assessment of the current jobs market did weaken noticeably. Those saying jobs are currently hard to get rose 4.3 percentage points to 49.1 percent in what points to month-to-month weakening in payroll growth and the unemployment rate.
Mild positives in the report are upticks in buying plans for cars and major appliances though buying plans for homes once again fell back sharply. One-year inflation expectations are unchanged at 5.8 percent.
Gyration in the stock market is another negative for August and is likely contributing to the pessimism. Those seeing gains ahead for the stock market fell more than eight percentage points in the month to 20.7 percent while those seeing declines rose nearly 13 basis points to 50.3 percent. This is the weakest assessment since March 2009.
Stocks are moving lower in reaction to this report which is also spurring a move into the safety of Treasuries. Today's results really should be no surprise given the buckling shown at mid-month in the consumer sentiment report. When it comes to consumer spirits, the health of the jobs market is the central focus and these results point to trouble for Friday's employment report.
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Market Consensus before announcement
The Conference Board's consumer confidence index rose 1.9 points in July to 59.5 from a revised 57.6 in June. These levels are very depressed and far from an 80 reading that would be consistent with strong economic conditions. The expectations component gained 3 points to 75.4 while the present situation index slipped 1.9 points to 35.7. While more respondents say jobs are hard to get and describe current business conditions as bad, there is less pessimism for coming months. For the six-month outlook, an increased percentage sees more jobs ahead and more say business conditions will improve. Also, more see their income on the rise.
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Definition
The Conference Board compiles a survey of consumer attitudes on the economy. The headline Consumer Confidence Index is based on consumers' perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income. Three thousand households across the country are surveyed each month. In general, 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
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![[Chart]](showimage.asp?imageid=21302)
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Typically retail sales will move in tandem with consumer optimism - although not necessarily each and every month.
Data Source: Haver Analytics
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