Consumer spending is up with the CCI, but new jobs remain scarce. (Photo Credit: BY-SA/Quinn Dombrowski/Flickr)

The Associated Press reports that the U.S. Consumer Confidence Index (CCI) rose in January to the highest level experts have seen in the past eight months. The CCI climbed to 60.6 in January, up 53.3 from December, according to the global non-profit organization Conference Board. Shrinking unemployment and improving business conditions are believed to be key factors in the increased optimism U.S. consumers have shown in both their spending and saving habits.

Consumer Confidence Index better, but still not healthy

While economists are encouraged by the CCI’s rise to 60.6, that level is still far below the 90 that indicates at least semi-healthy consumer confidence in spending and use of short-term credit like payday loans. The Consumer Confidence Index measures how people feel about the state of the U.S. economy. The figure is based upon a survey of 5,000 households, according to the blog Banker Notes. The CCI hasn’t been above 90 since December 2007.

January’s 60.6 CCI is the highest since a 62.7 mark in May 2010, when it appeared that the U.S. economy was ready to take off again. Yet the summer was sluggish economically, and the CCI flagged. Unemployment surged to the highest levels seen in the U.S. since the 1930s, and unemployment levels still haven’t regained their footing since they hit bottom in June 2009.

Hope of job deliverance

The AP reports that a survey from the National Association for Business Economics shows that the number of companies optimistic about hiring is at a 12-year high. This coincides somewhat with the reaction consumers gave to a Conference Board survey regarding the state of the job market, as the percentage of respondents who feel jobs are too hard to come by is down to 43.4 percent. That’s about a 3 percent drop from December. The percentage of those polled by the Conference Board who expect to see more jobs available in six months was also on the rise, from 14.2 percent in December to 16 percent in January.

Consumer spending up, unemployment down

The 2010 holiday shopping season was a boon for consumer spending, as sales increased at the fastest rate in six years. The new Social Security tax cut is expected to contribute to further consumer spending. Meanwhile, unemployment was down 0.4 percent from November to December, yet U.S. job creation only produced 103,000 jobs.

Sources

Associated Press

Banker Notes

Plunkett Research on U.S. retail

New reports on retail sales and consumer confidence present conflicting data until one reads between the lines. Image: CC Svadifari/Flickr

Retail sales and consumer confidence are key economic indicators closely watched by economists and investors. People often assume retail sales and consumer confidence would rise and fall in tandem. But separate reports released Friday show a strong 2010 retail sales trend followed by declining consumer confidence in January.

Retail sales surge in 2010

Retail sales in the U.S. increased at a greater rate in 2010 than in any year since 1999, according to the Commerce Department. From 2009 to 2010, U.S. retail sales increased 6.8 percent, the strongest growth since an 8.2 percent surge in 1999. December retail sales rose for the sixth month in a row, increasing 0.6 percent to $380.9 billion after rising 0.8 percent in November. Despite the holiday shopping season, December’s gain was less than expected, largely due to harsh winter weather. Department store sales dropped 1.9 percent, the steepest decline in two years. But online sales rose 2.6 percent month-over-month to ensure an overall monthly gain.

Consumer confidence a fickle index

Despite the strong retail sales trend, consumer confidence in January declined unexpectedly. The Thomson Reuters/University of Michigan consumer confidence index for January fell to 72.7 from 74.5 in December. A Bloomberg News survey of economists predicted a bump in the consumer confidence index to 75.5. Analysts are saying rising gas and energy prices, combined with the snail’s pace of job creation are to blame. Unemployment fell to 9.4 percent in December, but at the present rate of economic growth, the labor market will take years to recover. Higher gas prices increased sales at gas stations 1.6 percent last month. Energy prices rose 4.6 percent in December.

Data bode well for consumer spending

Consumer confidence has dropped so far this month, but economists say the consumer expectations index is a more accurate economic indicator. The consumer expectations index looks at how people feel about what their finances will look like six months down the road. The Commerce Department reports that it increased to 68.2, the highest mark since last June. The strengthening consumer expectations index bodes well for consumer spending, the lion’s share of U.S. economic output. Although recent reports offer conflicting information, the trend in retail sales appears strong enough to drive economic recovery, if not employment.

Sources

Bloomberg

Financial Times

Wall Street Journal

Consumer confidence posted a modest gain in August -- data that bumped stocks and eased concerns that anemic consumer spending will derail economic recovery. Charlie Brewer/Flickr photo.

The Conference Board’s monthly report on its consumer confidence index showed that the metric used to gauge economic outlook actually bumped up a couple of points in August. The modest gain gave the stock market a jolt into positive territory Tuesday morning.

Consumer confidence index beats forecast

Consumer confidence rose in August to beat predictions. Bloomberg reports that the increase in the consumer confidence index to 53.5 from a five-month low of 51 in July could be a sign the biggest part of the economy may avoid a further slide that could effectively end a stalled economic recovery. But even with the increase, an economist told Bloomberg that the August consumer confidence figure is at a “stunningly low level.” Even so, higher confidence brings a ray of hope that consumer spending — 70 percent of the U.S. economy — will recover. To do that, companies need to start hiring more. Yet according to the Labor Department, companies created an average of 51,000 jobs from May through July — down from 200,000 the previous two months.

Consumer confidence report details

In addition to the consumer confidence index, the Conference Board report contains other details. MarketWatch reports that more consumers are pessimistic about the present situation of the economy, yet optimistic that conditions will improve. The Conference Board’s present-situation index — a measure of attitudes about business climate and job opportunities — dropped to 24.9 in August from 26.4 in July. The expectations index — a measure of expectations for a better business climate and more job creation — rose to 72.5 in August from 67.5 in July. Consumers planning to buy a home within six months moved to 2 percent from 1.9 percent. People planning to buy a car rose to 5 percent from 4.7 percent. An economist told MarketWatch that despite the August gains, consumer confidence is at “incredibly depressed levels,” compared with previous economic recoveries.

Bump in index doesn’t guarantee consumer spending

A consumer confidence index above 90 indicates a healthy economy, according to the Associated Press. Yet the August bump put the brakes on a sliding stock market Tuesday morning. About two stocks rose for every one that fell on the New York Stock Exchange. Like all recent market rallies, this one is expected to be short-lived. Most economic reports show economic growth is slowing, and the slight uptick in consumer confidence doesn’t guarantee an increase in consumer spending. A high unemployment rate continues to motivate consumer saving and debt reduction — behavior considered virtuous from a personal finance standpoint. But until the job market recovers and people open their wallets, the late-summer slump could continue for the rest of the year and drag the U.S. economy into a double-dip recession.

U.S. auto sales rose for the eighth consecutive month as credit thaws, consumer confidence increases and gas prices remain stable. Flickr photo.

U.S. auto sales jumped significantly in May, without a program like Cash for Clunkers, special tax breaks or any other government stimulus. Aided by a huge Memorial Day weekend, U.S. auto sales managed to finish the month 19 percent over May 2009. Analysts credit a rising consumer confidence index and lower gas prices for the increase in car buying. All U.S. automakers exceeded sales expectations for May, with SUVs making a comeback. Conspicuously lagging behind was Toyota, still feeling the negative effects of massive recalls earlier this year.

Car buying makes a comeback

The big increase in U.S. auto sales, like the consumer confidence index, is a leading indicator for an improving economy. The Associated Press reports that credit is loosening up for easy loans and gas prices are stable. Car buying rose despite an 8 percent decline in the stock market last month. U.S. automakers saw double-digit increases over the same month last year, when GM was headed into bankruptcy and Chrysler was already there. Foreign automakers also saw increases of 20 percent or more — except for Toyota, whose sales rose just 7 percent.

Rising consumer confidence, stable gas prices

U.S. auto sales statistics were fueled by a consumer confidence index that rose to its highest level since March 2008, according to  businessweek.com, which also reports that the daily national average of gasoline prices tracked by the American Automobile Association has remained less than $3 for more than 18 months. Gas prices contributed to the comeback in SUV sales like the Chevrolet Equinox and Ford Edge. Overall U.S. auto sales rose to 1.1 million, the eighth straight monthly increase, the longest streak in almost a decade, according to Bloomberg data.

Auto sales statistics

U.S. auto sales for General Motors, the No. 1 U.S. automaker, were up 17 percent compared to May 2009. CNNMoney.com reports that GM’s sales gains were led by a 32 percent rise in sales of four of the brands that survived its bankruptcy filing: Chevrolet, Buick, GMC and Cadillac. Sales of the brands GM shed as part of its bankruptcy were down 94 percent from a year ago, although those brands now make up less than 1 percent of the company’s U.S. sales. It has less than 1,500 of those brands’ vehicles left in inventory, most of them Hummers. Ford reported a 23 percent rise in sales at Ford, Lincoln and Mercury — although it announced that Mercury will be discontinued at the end of the year. Even Chrysler posted a 33 percent sales increase — although it virtually ceased production during its bankruptcy last May.

Auto sales: room for improvement

The recent run of U.S. auto sales increases is welcome news after four consecutive years of decline in the U.S. auto market through 2009. Reuters reports that major automakers expected overall sales to be about 11.5 million in 2010. That would be up from the 27-year low of 10.4 million sales recorded in 2009.

The Consumer Confidence Index exceeded expectations in May as it increased for the third straight month despite a tanking stock market and global economic uncertainty. Flickr photo.

Consumer confidence and the stock market took markedly different paths Tuesday. The Consumer Confidence Index, fueled by a brightening employment outlook, rose to a level that exceeded expectations. The stock market, on the other hand, dived below 10,000 Thursday afternoon as investors cowered in fear of the European debt crisis and escalating hostilities between North and South Korea.

Consumer Confidence Index report

The Consumer Confidence Index report from the Conference Board, a research group based in New York, said its Consumer Confidence Index rose to 63.3, up from a revised 57.7 reading in April. Economists surveyed by Thomson Reuters had expected 59. The Associated Press reports that the Conference Board Consumer Confidence Index survey — based on a random survey of consumers from 5,000 households between May 1 and May 18 — includes volatile days in the stock market like the May 6 Flash Crash and European debt crisis, but it was completed before the Korean crisis and a 376-point dive on May 20, the stock market’s worst one-day drop in more than a year.

Stock market ignores consumer confidence

For the first time in more than five years more people are eligible for no fax payday loans. The consumer confidence index is based on a representative sample of 5,000 U.S. households. Tuesday’s report was the third consecutive increase and the highest level since March 2008. MarketWatch reports that the percentage of people who thought there would be more jobs in six months outnumbered the percentage who thought there would be fewer jobs. Meanwhile, when the latest report on the Consumer Confidence Index was released, the Dow Jones Industrial average had fallen more than 12 percent from its recent high of 11,205, reached April 26.

Consumer confidence index data

The consumer confidence index has been rebounding slowly since a record low of 25.3 in February 2009. A reading above 90 indicates the economy is stable; above 100 signals strong growth. Consumer confidence index data means a lot to economists because consumer spending accounts for about 70 percent of U.S. economic activity. CNNMoney.com reports that the expectation index, which measures consumer outlook over the next few months, rose to 85.3, the highest level since August 2007, when it came in at 89.2. Last month, employers added  the most jobs since March 2006, and economists expect payrolls to increase by 500,000 jobs this month, which would be the most since September 1997.

The stock market consumer confidence disconnect

The consumer confidence index and the stock market appear to be on different planets. MarketWatch said that with banks withholding credit and U.S. consumers not spending, it was the $800 billion government stimulus package that jump-started a return to growth in gross domestic production, jobs and more recently consumer confidence. On the stock market planet, investors, after seeing stocks plunge more than 50 percent twice in the past 10 years, are looking for other ways to make easy money.