Consumer Confidence Surges
Well, it won’t be all doom and gloom here today. Consumer confidence — an important bellwether of increasing household spending — shot up last month.
The Conference Board says that consumers’ expectations about today’s and tomorrow’s economic conditions continue to improve from low lows. Consumers’ six-month outlook climbed to the highest it has been since August 2007, before the recession started and the financial crisis hit. The main confidence index rose for the third straight month. From the release:
Consumers’ assessment of current-day conditions continued to improve in May. Those saying conditions are “good” increased to 10.0 percent from 8.9 percent, while those saying business conditions are “bad” declined to 39.3 percent from 40.0 percent. Consumers’ appraisal of the labor market was also more positive. Those claiming jobs are “hard to get” decreased to 43.6 percent from 44.8 percent, while those saying jobs are “plentiful” was virtually unchanged at 4.6 percent.
Consumers’ optimism about the short-term future was significantly better in May. The percentage of consumers expecting business conditions will improve over the next six months increased to 23.5 percent from 19.7 percent, while those expecting conditions will worsen declined to 11.5 percent from 12.4 percent. Consumers were also more confident about future job prospects. Those anticipating more jobs in the months ahead increased to 20.4 percent from 17.7 percent, while those anticipating fewer jobs declined to 17.7 percent from 19.9 percent. The proportion of consumers anticipating an increase in their incomes improved to 11.3 percent from 10.5 percent.
The trend is good even if the empiric numbers aren’t. (For every one person who thinks jobs are easy to come by, 10 believe they are hard to get; for every one person who thinks times are good, four think they’re bad.) The real concern is that continued high unemployment, very unsteady markets, the European crisis and a housing decline might discourage consumers — whose spending accounts for about 70 percent of the economy — from opening their wallets, sending these statistics down again. The headwinds remain obviously strong.