Tuesday, July 26, 2011

USA Consumer Confidence Improves Slightly in July (Charts) "Consumers remain apprehensive about the future"


The Conference Board: Monthly Consumer Confidence Index

Official Statement by The Conference Board (July 26, 2011) The Conference Board Consumer Confidence Index, which had declined in June, improved slightly in July. The Index now stands at 59.5 (1985=100), up from 57.6 in June. The Present Situation Index decreased to 35.7 from 36.6. The Expectations Index rose to 75.4 from 71.6 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 July’s preliminary results was July 14, 2011. Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence posted a modest gain in July, the result of an improvement in consumers’ short-term outlook. Consumers’ appraisal of current business and employment conditions, however, was less favorable as concerns about the labor market continue to weigh on consumers’ attitudes. Overall, consumers remain apprehensive about the future, but some of the concern expressed last month has abated.”

Trend The short-term trend (3-month moving average) continues downwards with 3 consecutive monthly decreases. The intermediate-term trend (6-month moving average) continues downwards with 2 consecutive monthly decreases. The long-term trend (12-month moving average) continues upwards with 2 consecutive monthly increases.

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. 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 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 July 2011 at 59.9.

Commentary The July 2011 Consumer Confidence Index of 59.5 (preliminary) is an increase of +1.9 from June. This gain is more than offset by the drops of -4.1 in June and -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. Yet the Consumer Confidence Index continues 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. In addition, the current Consumer Confidence Index is likely a bit too optimistic and overstated as the effective date was July 14, 2011. The debt ceiling deadlock in Washington D.C. has since become more serious and urgent, which undoubtedly has lowered consumer confidence with the prospects of a USA default on the debt and cessation of other payments, such as Social Security, Medicare, and Medicaid.

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