Courtesy of Mish.
Consumer Sentiment and Consumer Confidence are similar measures by two different organizations. The former is from the University of Michigan, the latter is by the Conference Board.
Consumer Confidence soared to 125.6 in March, up from 116.1 in February. This is the strongest reading in over 16 years.
Bloomberg Econoday cites the strength in both the current index and the expectations index, emphasis mine.
Highlights
It was two cycles ago that the consumer confidence index has been this high, at 125.6 in March for the strongest reading since December 2000. At 113.8, the expectations component hasn’t been this high since September 2000. The present situation component is at 143.1 for its best reading since August 2001 which was just at the end of the 1991 to 2001 economic cycle.
Subcomponents in the present situation are closely watched for indications on the monthly employment report and today’s results are very positive. Fewer, at 19.5 vs 19.9 percent, say jobs are hard to get this month and many more, at 31.7 vs February’s 26.9 percent, say jobs are plentiful.
A key reading on the expectations side is income, and here too the results are very positive. More this month, at 21.5 vs 19.2 percent, see their income increasing over the next six months and fewer, at only 7.0 vs 8.1 percent, see their income declining.
Buying plans are mixed with autos up but homes down. A negative in the report is a 2 tenths decline in 12-month inflation expectations to only 4.6 percent which is very low for this reading.
Consumers are extremely upbeat right now though the lack of inflation expectations doesn’t quite fit. What else doesn’t fit is actual consumer spending which has failed to match the strength underway in confidence. Watch on Friday for the consumer sentiment report which breaks down what it describes as unprecedented polarization in its sample between the optimism of Republicans and the pessimism of Democrats.
Questioning the Numbers
The conference board surveys 3,000 people every month.
Is 3,000 a sufficiently large number to map out confidence levels for the entire nation? I will ask Salil Mehta at Statistical Ideas for feedback on that question.
The more pertinent question, which I have discussed before, is: Does consumer confidence track spending?
That’s a widely held belief. And every month Econoday reinforces that belief with this statement: “While the level of consumer confidence is associated with consumer spending, the two do not move in tandem each and every month.”
Consumer Sentiment Snake Oil
