The market rallied yesterday after the Consumer Confidence report came in much better than expected. Within the Conference Board's monthly confidence survey, they ask participants if they plan to buy an auto, home, or appliance at some point in the next 6 months. Below we highlight historical charts since 1967 for each of these surveys.
As shown, the percentage of people planning to buy a car in the next six months jumped a little to 5.5% in May. Ever since the late 1990s, however, this number has been in a clear downtrend. Interestingly, the chart shows a wave pattern that trends downward for a number of years, then jumps for a few years, then does the same thing over again. This is an intriguing look at the patterns of consumers. They all seem to buy over a window of a few years, then slow their buying over the next 5-10 years. Once their cars start getting old, they all flock to buy new cars at the same time again. And the number of years that the survey trends down in the pattern is getting longer, probably due to cars lasting longer and longer.
If the pattern holds, we should be in store for a new round of buying soon, and this coincides with the release of new hybrids and electric cars that consumers will probably be switching to as their cars from the late 1990s and early 2000s get dated.
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Unfortunately, the percentage of participants planning to buy a home in the next 6 months didn't increase much and currently stands at 2.3%. The historical chart of this one doesn't fit a set pattern like the auto survey, but it has trended downward for this entire decade, even as we've had a huge housing boom and bust.
And plans to buy a new appliance jumped quite a bit in May, up to 28.7%. This number still remains low compared to historical numbers, but it didn't reach the lows seen in the early 80s and early 90s at any point during the current recession. Is this because the technology of new appliances is much better than ones bought over the last 10 to 20 years, even more so than it was back in the 80s and 90s?
