Economic Signs of Optimism

by: Arnold Landy

The Conference Board’s Consumer Confidence Survey rose sharply in April to 39.2 from 26.9 in March. The March figure had been, itself, an increase over the previous month. Notably, this survey’s Present Situation Index showed a moderate gain, while its Expectations Index shot up from 30.2 in March to 49.5 in April. Sounds like the American consumer is feeling more optimistic about the future. Consumer Confidence, as measured by the Conference Board now stands at its highest level of 2009.

In other good news (sort of), the Case-Shiller Index of house prices for February showed a year-over-year decline of 18.6% (only), which was less than the previous month’s 19.0% drop. So the decline in house prices is moderating, slightly. This data will become more important over the next few months as we enter the Spring selling season for houses and the data reflect a greater number of transactions.

One factor in making consumers more optimistic may well have been the sharp rise in the stock market, starting in March. In turn, Tuesday morning’s announcement of the Consumer Confidence data triggered a rally in the stock market, which quickly went from negative to positive. Thus, the economy continues its early unsure steps on its journey upward. As more and more positive economic news reports appear, they will be bound together in the minds of consumers and investors to form a positive feedback loop in which good news stimulates other good news.

Disclosure: No stocks are cited in this article