GEI welcomes Doug Short as a new contributor. Doug will specialize in analysis of consumer confidence and write occasionally on other topics. Bio is found at the end of this article.
The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through December 20. The 52.5 reading was below the consensus estimate of 56.1, according to Briefing.com. Here is an excerpt from the Conference Board report:
Let’s take a step back and put Lynn Franco’s rather rosy interpretation in a larger perspective. The chart below is intended to help evaluate the historical context for this index as a leading indicator of the economy. Toward this end I have included recessions and GDP. The linear regression through the index data shows the long-term trend of this very volatile indicator. Today’s 52.5 reading is significantly below the 85.3 of the current regression level (38.5% below, to be precise).
For an interesting comparison, see this post on the November University of Michigan’s 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 optimism, the latter by way of the National Federation of Independent Business (NFIB).
The NFIB index has been less volatile than the Conference Board Consumer Confidence Index, but it has likewise remained bleak despite the official end to the recession in June 2009.