Confidence on the rise as clock ticks down on 2011


If the latest Conference Board data on consumer sentiment is correct, the average American believes the economy is starting to show signs of life. There is still a ways to go, but consumers came close to producing a double-digit increase over the level of confidence expressed in November.

All three major categories were up: The benchmark Consumer Confidence Index rose from 55.2 to 64.5; the Present Situation Index rose from 38.3 to 46.7; and the Expectations Index DID just barely manage a double-digit gain, rising from 66.4 to 76.4

CB’s Lynn Franco commented, “After two months of considerable gains, the Consumer Confidence Index is now back to levels seen last spring (April 2011, 66.0). Consumers’ assessment of current business and labor market conditions improved again.  Looking ahead, consumers are more optimistic that business conditions, employment prospects, and their financial situations will continue to get better. While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes.” 

Improvement is one thing; believing things are great is another. Only 16.6% believe business conditions are good, up from 13.9%; and even though fewer think conditions are bad, it still only declined to 33.9% from 38%. Only 6.7% believe jobs are plentiful, and 41.8% still think they are hard to get.

Most expect business conditions to remain flat over the next six months, but there was a welcome reversal in expectations on either end of the spectrum compared to November, when more expected deterioration rather than improvement. Optimists improved from 13.7% to 16.7% while pessimists declined from 16.1% to 13.4% — producing a set of numbers that are definitely headed in the right direction.

The Conference Board uses Nielsen date to produce its monthly reports.

RBR-TVBR observation: A number of surveys are producing similar results. Does it reflect real economic improvement or empty new year optimism? Stay tuned.