Consumer Confidence Highest in 5 Months

[wicket]

http://story.news.yahoo.com/news?tmpl=story&ncid=&e=6&u=/ap/20041228/ap_on_bi_ge/economy

Consumer confidence jumped in December, reversing four months of declines and reaching the highest level since July, a private research group reported Tuesday.

Conference Board (news - web sites), a New York based business information group, reported that its index of consumer confidence leapt by nearly 10 points, a significant move, to 102.3 in December from 92.6 in November. It was the highest level for the indicator since its reading of 105.7 in July.

The upbeat reading ends the year on a high note and bodes well for consumer spending going into 2005. The indicator of consumer confidence is widely watched by economists since spending by individuals makes up about two-thirds of all economic activity in the United States.

[Deja Q]

1. Funny how one month it's all depressing and then the next, it's exuberant.

Hmmm, somebody's got bipolar disorder in the media. :crazy:

[redqueen]

2. Don't they usually publish 'adjustments'

a month or so after the announcement of these types of things?

[durablend]

3. Wait until all the jobs go bye bye next month!

Or does the stupid MSM expect all the businesses to keep on the holiday help they hired?

(and we need not mention when the CC bills come next month!)

[Demeter]

24. 7% Officially Unemployed in Mich--Real Numbers ? Who Knows?

Party like it's 1984 again.

[William Bloode]

4. I'd say.....

This is a result of peoples "hopes" for the coming year. Folks tend to be very optimistic at this time of yr. But those sentiments hold no water in reality, and i fully expect them to go right back down again after the 1st of the new year.

[gatorboy]

5. Wait til they get their credit card bills.....

n/t

[displacedtexan]

11. Exactly! 15% increase in holiday sales are due to credit card sales.

I read that this morning on the news ticker.

Sad. We are (as a nation) so consumed with status that we go deeper into 16 Tons And What Do You Get? debt in December.

[wicket]

12. Too true...

Americans are DROWNING in debt.

[Sanity Claws]

6. I don't get it

Other stories indicated that Christmas sales were not as good as expected. How can Consumer confidence be higher than expected yet consumer sales be lower than expected?
Someone is spinning something.

[Yavin4]

7. They Both Can Be True

Americans have enjoyed historically low interest rates for the past four years, and they have gone on a borrow and spend binge. Americans are conditioned to believe that this over-consumption lifestyle is normal.

[0007]

10. ....and with the dollar hitting new lows?

[ProfessorGAC]

14. That Has Minimal Short-Term Effect On Most Consumers

The currency position influences things in the consumption markets slowly and with a definitive lag. So, people won't notice the dollar strength having any reall marked effect for a while. Hence, it doesn't affect them very much and consumption rises during the holiday shopping season.

Pretty much normal behavior and statistically quite predictable.
The Professor

[Sanity Claws]

17. I still don't get it

I agree with what you said. However, actual sales, I understand, were down. People are tapped out on credit.
I just don't understand why there wasn't the spending if consumers are confident.

[Yavin4]

21. Confidence Is A Psychological Measurement

Not a hardcore statistical measurement. Because of the season, people are putting forth an effort to feel joyous and confident. Much like the survey of the military which showed support for the war in Iraq, even though it's going very badly.

[Mika]

8. Kool Aid

[Swamp Rat]

9. Propaganda

[ProfessorGAC]

13. That's Not Unusual

Consumer Confidence numbers typically rise a little at the end of the year. Most researchers believe it's a combination of both the holiday shopping season, and the hopefulness of the approaching new year. (The latter is a standard sociological construct. Hence the popularity of New Year's Resolutions. Lots of folks like to believe the new year will be better than the last.)

Take a look at the last 30 years, and you'll see that this bump is fairly typical at the end of each year. I haven't looked at it in enough detail to see if the bump is statistically different or similar than the norm, but seeing a bump is to be expected.
The Professor

[papau]

15. For reference: Nov 99=137.0, Dec=141.7, Jan 00=144.7, TODAY=102.3

2004 results

[Barkley]

16. Consumer Confidence Index: A Leading Indicator

The Consumer Confidence Index (CCI) is published by the Conference Board. It is based on answers to just five survey questions, about respondents' assessments of business and employment conditions, now and in six months, and of the likely family income in six months.

Accordingly, the CCI is a leading indicator because it tries to predict what consumers will do in the future.

If consumers are confident and intend on spending more money now and in the future, output of firms will need to expand to keep up with consumers’ demand for goods.

If consumers are pessimistic and intend on spending less money now and in the future, output of firms will need to contract to rid themselves of unsold inventories.

But Consumer Confidence numbers also reflect what people hear on the news. Yale Professor Robert Shiller cautions about reading too much into the CCI:

“Surely many respondents to these surveys are reflecting what they
hear on the evening news, rather than probing their inner psyches.”

[ProfessorGAC]

18. Duh!

Of course it's a leading indicator, since the economy is 70% consumption. This is tautological and has no real mathematical significance as an indicator. It HAS to lead changes in consumption, since it's only human to save or spend based upon the confidence one has in getting more of the green.

It may be a good indicator of people's confidence in certain fiscal or monetary policies, but it's not terribly useful as an indicator of economic health, since it's autocorrelated to consumption.

Of course, the CB won't tell us that. That demystifies it, and subbrogates their "genius" status.
The Professor

[Barkley]

20. No Duh!

As renowned British economist A. C. Pigou wrote in 1929 that psychological factors account for about half of fluctuations in industrial production: he spoke of "psychological interdependence," "sympathetic or epidemic excitement" and "mutual suggestion."

His judgment seems about as good today as in 1929 and the factors he described are still not easily measured.

[ProfessorGAC]

25. What?

You're not disagreeing at all. You're actually confirming what i said!

It's a poor leading indicator of economic strength or health because the consumption is autocorrelated to the confidence. And, since there is no clear psychological link between ACTUAL economic vibrancy and consumer confidence, it's not based upon what the economy is actually doing at the time. Then, if confidence goes up, no matter how misplaced that confidence may be, consumption goes up.

So, it's an indicator of what people think, and a short term indicator of consumption and velocity, but not really the overall stability of the economy.

So, it's still a "duh"! You seem to think you're disagreeing with me, but you're not. We're in full agreement.
The Professor

[Tempest]

19. It's what I call The Great Disconnect

Real wages are down, inflation is up, energy costs are skyrocketing and personal debt is at a record level.

And yet people want to believe they are doing better.


P.T. Barnum's theory in practice.

[fortyfeetunder]

22. Poll actually taken on Rodeo Drive in LA

This is a bunch of BS. I can't believe it. They must have selectively interviewed a bunch of rich SOB's for such skewed results.

[barb162]

23. this has to be a mistake; in a few weeks it will be revised downward

[cosmicdot]

26. "It was ... well above the 94 ... investors had been expecting."

is that a low 'expectation', or a sign of a booming economy?

if it resembles anything near a pulse on the economic patient, wheel
it out there for public consumption with the best spin as possible ... the Corporate Media is propping up the ** Party on January 20th

the up-and-down economic news tells me the patient needs to be in intensive care, but instead it's in the hands of mad (faux) scientists ... with consumer confidence propping up bottomlines, what is economic reality?

heck, the other day, Corporate Media was selling "consumer sentiment"
http://story.news.yahoo.com/news?tmpl=story2&u=/ap/20041223/ap_on_bi_ge/consumer_confidence

... pop the bubbly ... on to the coronation :crazy:

[leesa]

27. What utter nonsense!

[wicket]

28. kick

:kick: