Tuesday, March 29, 2011

USA Consumer Confidence at 3-Month Low (Charts) March: "Sharp decline in expectations"

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The Conference Board: Monthly Consumer Confidence Index


Official Statement by The Conference Board The Conference Board Consumer Confidence Index®, which had increased in February, declined in March. The Index now stands at 63.4 (1985=100), down from 72.0 in February. The Present Situation Index improved to 36.9 from 33.8. The Expectations Index decreased to 81.1 from 97.5 last month. Says Lynn Franco, Director of The Conference Board Consumer Research Center: “The sharp decline in confidence was prompted by a sharp decline in expectations. Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions. On the other hand, consumers’ assessment of current conditions improved, indicating that while the short-term future may be uncertain, the economy continues to expand.”

Trend The current trend reversed from strongly upwards, and a 3-year high, in February to plunging in March. The March Consumer Confidence Index (CCI) of 63.4 (preliminary) is the lowest since December 2010 (63.4) and:
=> Continues above the ascending 12-month moving average of 58.3 for the 5th consecutive months (see chart below)
=> Continues above the ascending 24-month moving average of 54.5 for the 13th consecutive month
=> Continues above the leveling off 36-month moving average of 51.8 for the 5th consecutive month
=> (The 24-month and 36-month moving averages charts are not shown on this page)

Cycle History The current Consumer Confidence Index (CCI) in March of 63.4 (preliminary) is down -48.5 and -43% from the cyclical peak of 111.9 in July 2007. The current CCI is up +38.1 and +151% from the Great Recession cyclical bottom of 25.3 in February 2009. Therefore, the CCI is closer to the cyclical low than the high.

Monthly Consumer Confidence Index (Chart) Below is a chart of the past 45 months of The Conference Board CCI (preliminary) from the July 2007 cyclical high of 111.9 through the latest month reported, March 2011. As can be seen, the Consumer Confidence Index bottomed at a Great Recession cyclical low in February 2009 and the Great Recession officially ended in June 2009. After a peak in May 2010 of 62.7, the CCI has been in a range from a low of 48.6 in September 2010 to a high of 72.0 in February 2011. The current CCI of 63.4 (preliminary) continues well above the recent lows of 48.6 in September 2010 and 46.4 in February 2010.



Consumer Confidence Index 12-Month Moving Average (Chart) Below is a chart of the latest 43 months of The Conference Board Consumer Confidence Index 12-Month Moving Average from August 2007 through the latest month reported, March 2011 (preliminary). The previous chart above, the Index of Consumer Sentiment, is rather like following the bouncing ball when charting human sentiment, confidence, mood, and outlook regarding the USA economy and their outlook for their financial prospects. Therefore, the 12 month moving average chart smooths out some of these short-term ups and downs, greed and fear, optimism and pessimism. The Pre-Great Recession peak was in August 2007 at 107.8 while the Great Recession low was in September 2009 at 42.7. The Post-Great Recession peak has been the February 2011 (preliminary) at 57.2. The 12 month moving average has been ascending for 5 consecutive months, after a 3 month dip.



Commentary The March 2011 Consumer Confidence Index of 63.4 (preliminary) is a complete reversal from the 3-year high just last month, February 2011. The -8.6 drop from February is the largest drop since February 2010 (-10.1). The Consumer Confidence Index continues well above the recent lows of 48.6 in September 2010 and 46.4 in February 2010. The spike in oil prices is the primary cause of the decrease plus the Japanese earthquake, Middle East unrest, and USA fiscal problems (local, state, federal) have contributed to lowered consumer confidence.


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*Data courtesy of The Conference Board*

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