Two companies that measure the general mental state of consumers have reported improvement in their monthly temperature-taking, a positive sign going into the holiday shopping season. But there remains much room for even more improvement.
The Conference Board pegs consumer confidence at 54.1 for November, well above October’s 49.9 reading and above par – a reading of 50 is neutral, so the body of opinion moved into the mildly optimistic zone. The Present Situation index is at a very modest 24.0, but that’s up from 23.5, and the Expectations Index is 74.2, well above October’s reading of 67.5.
Conference Board’s Lynn Franco said, “Consumer confidence is now at its highest level in five months, a welcome sign as we enter the holiday season. Consumers’ assessment of the current state of the economy and job market, while only slightly better than last month, suggests the economy is still expanding, albeit slowly. Expectations, the main driver of this month’s increase in confidence, are now at the highest level since May (Exp. Index, 84.6). Hopefully, the improvement in consumers’ mood will continue in the months ahead.”
RBC Consumer Outlook Index was on the wrong side of par, but also was up. Its December reading came in at 45.2, up 3.2 from the prior month, and significantly, it was the best reading since September 2008, just prior to the financial meltdown.
“Consumers are entering the holiday season with greater hope and optimism than at any point since September 2008 – just before the global financial crisis hit a fever pitch—closing out 2010 on a high note,” said Marc Harris of RBC Capital Markets. “Although the RBC Consumer Outlook Index witnessed a sharp improvement this month, it still reads below the long-term average, which is in line with what we believe will continue to be a backdrop of cautious consumer spending.”
RBR-TVBR observation: These kinds of indexes are nebulous, and it is not uncommon at all for two surveys conducted at the same time to yield conflicting results. The fact that two reputable and well-known surveyors have come to a similar conclusion suggests that consumers really are feeling better.
Still, despite the improvement, confidence could not be called anything remotely close to robust. And the question for those of you who insist on seeing the cloud that the silver lining is framing is this: Yeah, but what do consumers know?