Consumer Confidence Report Restores Confidence in Recovery

Tuesday's report on consumer confidence lends credence to economic forecasts that call for a recovery soon.

This is a big enough improvement in consumer attitudes that I'm confident it's not just a temporary blip. Although consumer confidence isn't the only thing to worry about, recall that the housing crash itself did not send us into recession; it was the collapse of consumer spending that pushed us over the edge. Now we're likely to see an improvement--not a return to the exuberant spending of 2005, but a measured increase in spending.

Comments

[CautiousInv...:]

I guess none of should be surprised that households should feel somewhat uplifted given the enormous efforts invested by the Fed, Treasury and Ministry of Information to have us believe all is well.

Those surveyed in the 5,000 households have likely been subjected to the carefully orchestrated media releases spun to the redline of journalism. Plus those urbane brokers with the pretty ties and shirts offer confidence building assurances that all is safe and we are at the steps of a new bull market.

And while it is certainly a data point, it’s far less clear it is a turning point. In these comparatively small surveys there is no attempt to distinguish between confidence and hope; we all survive on hope but confidence inspires big ticket spending.

I am of the view that consumers will need to see tangible improvements in the first derivatives of the real economy before they get too loose with their change and, even then, spending will be tempered by the need to save and repair troubled household balance sheets

May 27 08:50 AM