Boom Doom Economy: August 2011

Tuesday, August 30, 2011

USA Consumer Confidence Plunges to 29-Month Low! (Chart) "Consumers grew significantly more pessimistic about short-term outlook"

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The Conference Board: Monthly Consumer Confidence Index

Official Statement by The Conference Board (August 30, 2011) The Conference Board Consumer Confidence Index, which had improved slightly in July, plummeted in August. The Index now stands at 44.5 (1985=100), down from 59.2 in July. The Present Situation Index decreased to 33.3 from 35.7. The Expectations Index decreased to 51.9 from 74.9 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 the preliminary results was August 18th.

Commenting on the Consumer Confidence Index Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook. The index is now at its lowest level in more than two years (April 2009, 40.8). A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers' assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence."

Trend The Consumer Confidence Index in August 2011 of 44.5 (preliminary) is at a 29-month low, the lowest since April 2009 (40.8). The Consumer Confidence Index has decreased 3 of the past 4 months and decreased 4 of the past 6 months. The short-term trend (3-month moving average) continues downwards, the intermediate-term trend (6-month moving average) continues downwards, and the long-term trend (12-month moving average) now has reversed to downwards.

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 February 2005 through the latest month reported. The Great Recession officially ended in June 2009. The Consumer Confidence Index has been at and continues at historically low levels.

Commentary The August 2011 Consumer Confidence Index of 44.5 (preliminary) is a decrease of -14.7 from July and the largest monthly plunge since February 2010 (-10.1). The last monthly plunge larger was in October 2008 (-22.6), during the USA financial system crisis. Compared to the Pre-Great Recession peak of 111.9 in July 2007, consumer confidence continues at historically low levels regardless of the monthly ups and downs. The Consumer Confidence Index has dropped below the prior lows in the upper 40s in September and October 2010. The 2011 spike in oil prices, now abating, high unemployment, and the overall USA economic, fiscal and political issues have been the primary drivers for the downtrend. The debt ceiling debate and political results have contributed to lowered consumer confidence.

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Friday, August 26, 2011

USA Weekly Leading Index Drops to 44-Week Low! (Charts) Annualized growth rate continues negative

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ECRI Economic Weekly Leading Index and Annualized Growth Rate

* Updated August 26, 2011 for the week ended August 19, 2011 *

USA Weekly Leading Index

Overview The USA Economic Weekly Leading Index (WLI) dropped -1.0 to a 44-week low of 122.8 (preliminary) for the week ended August 19, 2011. This is the lowest reading since the WLI was 122.1 for the week ended October 15, 2010. This is the largest 2-week drop May 2010, just after the May 6, 2010 Flash Crash in the equity markets. The current Weekly Leading Index was undoubtedly affected by the drop in the equity markets and has a positive correlation with same.

Trend The short-term trend (13-week moving average) continues downwards. The intermediate-term trend (26-week moving average) continues decreasing. The long-term trend (52-week moving average) is now increasing slightly.

Cycle History The recent short-term low is the current reading of 122.8 (preliminary). The recent short-term peak was 131.9 for the week ended April 15, 2011. The Weekly Leading Index reached a Post-Great Recession peak of 134.9 for the week ended April 30, 2010. A Great Recession low of 105.4 was set for the week ended March 6, 2009.

Weekly Leading Index (Chart) Below is a chart of the ECRI Weekly Leading Index, including the intermediate-term low of 120.3 for the week ended July 9, 2010, through the latest week reported.

USA Annualized Growth Rate

Overview The WLI Annualized Growth Rate (AGR) plunged -2.0% to a 38-week low of -2.1% (preliminary) for the week ended August 19, 2011. This is the lowest reading since the AGR was -2.3% for the week ended November 26, 2010. This is the largest drop since -2.3% for the week ended June 11, 2010. The Annualized Growth Rate had been positive for 34 consecutive weeks before turning negative the past 2 weeks. The AGR has decreased 15 of the past 18 weeks, including decreasing 11 consecutive weeks from April 22 through July 1.

Cycle History The recent short-term peak was +8.0% for the week ended April 15, 2011. The recent short-term low is now the -2.1% (preliminary) the week ended August 19, 2011. The Annualized Growth Rate reached a Post-Great Recession peak of +27.8% for the week ended October 9, 2009. A Great Recession low of -29.8% was set for the week ended December 5, 2008.

Annualized Growth Rate (Chart) Below is a chart of ECRI WLI Annualized Growth Rate, including the intermediate-term low of -10.9% for the week ended July 23, 2010, through the latest week reported. The AGR became negative in early June 2010 and remained negative for 28 consecutive weeks. The AGR was then positive for 34 weeks (from the week ended December 17, 2010 through the week ended August 5, 2011). The AGR has reversed to negative beginning the week ended August 12, 2011.

Commentary Overall, the Weekly Leading Index and Annualized Growth Rate had appeared to be bottom-bouncing recently until strong drops the past 2 weeks. The current Weekly Leading Index at 122.8 (preliminary) is a 44-week low and dismal. The Annualized Growth Rate at -2.1% is a 38-week low and also dismal. Gains previously attained have eroded. The WLI has been below the now distant benchmark 130.00 level for 18 consecutive weeks and the AGR has been the 0.00% benchmark for 2 consecutive weeks after 34 consecutive weeks above. The Weekly Leading Index and Annualized Growth Rate overall continue at levels that indicate future economic growth is becoming questionable. Both the levels and trend are worrisome. Per the ECRI, the Weekly Leading Index projects forward approximately 6 months and the Annualized Growth Rate is relative to the WLI and is a 4-week moving average.