Sunday, July 3, 2011

USA Consumer Confidence Drops Again (Charts) "Continued pessimism about the short-term outlook"


The Conference Board: Monthly Consumer Confidence Index

Official Statement by The Conference Board The Conference Board Consumer Confidence Index, which had declined in May, decreased again in June. The Index now stands at 58.5 (1985=100), down from 61.7 in May. The Present Situation Index decreased to 37.6 from 39.3. The Expectations Index declined to 72.4 from 76.7 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 June’s preliminary results was June 16, 2011.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “This month’s decline in consumer confidence was driven by a less favorable assessment of current conditions and continued pessimism about the short-term outlook. Consumers rated both current business and labor market conditions less favorably than in May, and fewer consumers than last month foresee conditions improving over the next six months. Inflation fears eased considerably in June, but concerns about income prospects increased. Given the combination of uneasiness about the economic outlook and future earnings, consumers are likely to continue weighing their spending decisions quite carefully.”

Trend The short-term trend continues downwards with 2 consecutive monthly decreases and 3 declines in the past 4 months. The intermediate-term trend (6 months) has reversed to downwards. The long-term trend (12 months) is increasing 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 Great Recession cyclical low of 25.3 in February 2009 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 June 2011 at 59.3.

Commentary The June 2011 Consumer Confidence Index of 58.5 (preliminary) is a drop of -3.2 from May, following a drop of -4.3 in May. 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 in the upper 40s in September and October 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), including the debt ceiling debate, have contributed to lowered consumer confidence.

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*Data courtesy of The Conference Board*

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