Consumer Confidence Expectations Soar, Current Confidence in Gutter; Larry Summers Yaps about Second Stimulus
by ilene - May 25th, 2010 4:04 pm
Consumer Confidence Expectations Soar, Current Confidence in Gutter; Larry Summers Yaps about Second Stimulus
Courtesy of Mish
Although the consumer confidence current conditions index remains in the gutter, the expectations index shows increasing optimism. Please consider Consumers Gain Confidence as Employment Improves.
The Conference Board’s confidence index rose to 63.3, exceeding all estimates of economists surveyed by Bloomberg News and the highest level in two years, according to a report from the New York-based private research group. Other figures showed home prices rose less than projected in the year through March.
“I’m relatively optimistic that we’ll get through the European debt crisis without dire economic consequences, but the jury is still out on that one,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. Home prices “are going to drag along the bottom for a while until we get a better handle on the overhang” of inventories.
The Conference Board’s measure of present conditions increased to 30.2 this month, the highest level since December 2008. The gauge of expectations for the next six months surged to 85.3, the highest point since August 2007, four months before the recession began.
The percent of respondents expecting more jobs will become available increased to the highest point since December 2003.
Confidence, “although still weak by historical levels, appears to be gaining traction,” Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. Expectations have been “fueled primarily by growing optimism about business and labor market conditions,” she said.
Expectations Not the Same as Jobs
Present conditions are telling one story while expectations are another. However, expectations are not the same as jobs. People are starting to believe nonsense about the strengthening economy even as the treasury market and credit markets are singing a different tune.
I happen to believe the credit markets.
5-year treasury yields and rising junk bond yields paint a far different picture than consumer expectations. (Please see Corporate Bonds Smacked, Junk Yields Rise, Deals Pulled; Treasuries Rally; Yield Curve Flattens; Global Slowdown Coming for details).
No matter what one thinks of the US economy in isolation, it should be crystal clear that Europe is slowing and China is gasping for air with an export model not prepared for a slowdown anywhere, let alone a global slowdown.
Moreover, various stimulus packages in the US have run their…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
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