Courtesy of Mish.
Last week, three different measures of consumer confidence came out:
- University of Michigan: Consumer Sentiment
- Conference Board: Consumer Confidence Level
- Gallup: Economic Confidence Index
Claim of Importance
Bloomberg states “Consumer sentiment is directly related to the strength of consumer spending.”
Let’s investigate that claim starting with a look at the latest results from each survey.
Consumer Confidence
On August 25, the Conference Board’s “Consumer Confidence Level” soared well ahead of any Bloomberg Consensus estimate with a reading Bloomberg stated “will have forecasters scratching their heads.”
Enormous improvement in the assessment of the current labor market drove the consumer confidence index well beyond expectations, to 101.5 in August for a more than 10 point surge from July. A rare 6.5 percentage point drop to 21.9 percent in those describing jobs as currently hard to get points to outsized gains for the August employment report. This reading will have forecasters scratching their heads. The gain for this reading lifts the present situation component to 115.1 for a more than 11 point increase from July that points to consumer power for August.
The Yellen Fed has put great emphasis on the importance on consumer confidence readings and this report points to job-driven strength ahead for household spending.
Head-Scratching Sentiment
Three days later, the University of Michigan release was another head-scratching event. Bloomberg reported Consumer Sentiment in U.S. Declines to a Three-Month Low.
The University of Michigan sentiment number came in at 91.9, well below any guess in Bloomberg’s Consensus Estimate Range of 92.7 to 95.0.
An early reading on the effect of global volatility is downbeat as the consumer sentiment index came in well below expectations, at 91.9 for the final August reading. The mid-month reading was 92.9 which roughly implies a pace near 91.0 over the last two weeks which is the softest since May.
Consumer Sentiment
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