Saturday, June 4, 2011

USA Consumer Confidence Plunges in May (Charts) "A more pessimistic outlook"


The Conference Board: Monthly Consumer Confidence Index

Official Statement by The Conference Board The Conference Board Consumer Confidence Index, which had improved in April, decreased in May. The Index now stands at 60.8 (1985=100), down from 66.0 in April. The Present Situation Index decreased to 39.3 from 40.2. The Expectations Index declined to 75.2 from 83.2 last month.
The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by The Nielsen Company, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for May’s preliminary results was May 18, 2011.
Says Lynn Franco, Director of The Conference Board Consumer Research Center: “A more pessimistic outlook is the primary reason for this month’s decline in consumer confidence. Consumers are considerably more apprehensive about future business and labor market conditions as well as their income prospects. Inflation concerns, which had eased last month, have picked up once again. On the other hand, consumers’ assessment of current conditions declined only modestly, suggesting no significant pickup or deterioration in the pace of growth.”

Trend The short-term trend has reversed to downwards. The intermediate-term trend (6 months) continues upwards. The long-term trend (12 months) has leveled off and is decreasing slightly.

Cycle History The Consumer Confidence Index (CCI) reached a Post-Great Recession peak of 72.0 in February 2011. The Great Recession cyclical low was 25.3 in February 2009. The Pre-Great Recession peak was 111.9 in July 2007.

Monthly Consumer Confidence Index (Chart) Below is a chart of The Conference Board Consumer Confidence Index from the July 2007 cyclical high of 111.9 through the latest month reported. 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. The Consumer Confidence Index continues at historically low levels.

Consumer Confidence Index 12-Month Moving Average (Chart) Below is a chart of The Conference Board Consumer Confidence Index 12-Month Moving Average from the Pre-Great Recession peak in August 2007 through the latest month reported. The previous chart above, the monthly 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 own 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 at 72.0. The 12-month moving average dipped in May 2011 to 58.9, after 7 consecutive monthly increases.

Commentary The May 2011 Consumer Confidence Index of 60.8 (preliminary) is a sharp drop of -5.2 from April. Compared to the Pre-Great Recession peak of 111.9 in July 2007, consumer confidence continues at low levels regardless of the monthly ups and downs. 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 recent 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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