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Confidence

Page history last edited by PBworks 17 years, 6 months ago

Consumer Confidence as analysed by www.dismally.com

Definition:

The Conference Board conducts a monthly survey of 5000 households to ascertain the level of consumer confidence. The report can occasionally be helpful in predicting sudden shifts in consumption patterns, though most small changes in the index are just noise. Only index changes of at least five points should be considered significant. The index consists of two subindexes - consumers' appraisal of current conditions and their expectations for the future. Expectations make up 60% of the total index, with current conditions accounting for the other 40%. The expectations index is typically seen as having better leading indicator qualities than the current conditions index.

Chart:

Latest Data:

	September	August	July	June	May	April	March
2006	104.5	100.2	107.0	105.4	104.7	109.8	107.5

Recent review:

David Andrew Taylor - From www.dismally.com
U.S. consumer confidence moves higher.

I've actually been calling for the dollar to move higher for some time. I just expected the actual impetus to be something a little more important than the Confidence Board's Consumer Confidence. But, it was a one-two punch overnight with the German IFO first and now consumer confidence that is driving the dollar higher.

The fact that confidence is moving higher shouldn't be too much of a surprise to readers of this site. I've outlined a few times the correlation between consumer confidence and personal income. As income moves higher, on the aggregate, so does confidence. And why wouldn't it? If you're earning more, you're feeling better about life in general. Here's the chart on Consumer Confidence vs. Personal Income (which will be updated on Friday):

If you want a good idea of how confident Americans are going to be looking forward, just peel those oculars of yours on over to the far right of this chart. See that red line heading straight up? That's the rate of growth in incomes for Americans. Confidence is sure to follow, as this chart goes.