Courtesy of Doug Short’s Advisor Perspectives.
The latest Conference Board Consumer Confidence Index was released this morning based on data collected through May 19. The headline number of 92.6, was a decrease from the April final reading of 94.7, which is an upward revision from 94.2. Today’s number was below the Investing.com forecast of 96.0.
Here is an excerpt from the Conference Board press release.
“Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April,’ said Lynn Franco, Director of Economic Indicators at The Conference Board. “Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions. Thus, they continue to expect little change in economic activity in the months ahead.”
Putting the Latest Number in Context
The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.
On a percentile basis, the latest reading is at the 46% level of all the monthly data points since June 1977. That’s a decrease from 50% previous month.
For an additional perspective on consumer attitudes, see the most recent Reuters/University of Michigan Consumer Sentiment Index. Here is the chart from that post.
And finally, let’s take a look at the correlation between consumer confidence and small business sentiment, the latter by way of the National Federation of Independent Business (NFIB) Small Business Optimism Index. As the chart illustrates, the two have tracked one another fairly closely since the onset of the Financial Crisis, although a bit of spread has appeared in the second half of 2015 and start of 2016.
