Tuesday, August 30, 2011

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


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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