Consumer confidence rebounded strongly in November, the Conference Board reports. David Semmens, an economist at Standard Chartered Bank, opines that "the improvement in the labor market must be offering greater comfort to consumers." The question, of course, is whether the labor market's "improvement" can survive the sentiment attack blowing through the global economy via the euro crisis. Today's rise in the Conference Board's consumer benchmark provides fresh encouragement for thinking positively, but this is still mostly guesswork until the major economic reports for November arrive. For the moment, it's still a blank slate.
The good news is that October's numbers are clearly in the growth camp, as the table below reminds. Other than housing starts and new durable goods orders, the tide was rising across the board last month. Even better, the year-over-year trend is largely in the black too. A good tailwind never hurts, but as the OECD reminds, there's no shortage of risks for the global economy. It's debatable how much relevance the recent past has for the immediate future, but we'll all find out soon enough... one economic report at a time.
This much is clear: the deepening euro crisis and the deadlock over budget negotiations in Washington are still threatening. It's unclear how, or if, those twin threats will play out in the weeks and months to come, but it's easy to take a dim view of waiting (hoping) for policy makers to engineer salvation. Optimists in the U.S. counter that the recent revival in the economic numbers will overcome any obstacles in Europe and Washington. Maybe, but events are still too fluid to muster much confidence that the worst has passed.
The first big test for the November economic trend arrives this Friday with the update on non-farm payrolls. October's report wasn't all that impressive, although the 104,000 net gain in private-sector job creation was enough to keep the recession forecasters on the defensive. Brian Wesbury and his team at First Trust are expecting that November will deliver another month of growth, although they're hedging their bets. First Trust projects a rise of 95,000 private sector jobs for this month, just south of October's number.
That's quite a bit lower than the consensus forecast of 141,000, according to Briefing.com. Brewin Dolphin in London reminds that "the economy has been re-gaining momentum recently and the weekly jobless claims have improved thus pointing to better employment prospects and possibly a surprise that might be on the upside." RBC also cites the declining jobless claims numbers in recent weeks as a rationale for predicting a stronger pace with November private sector payrolls. RBC predicts a relatively strong gain of 120,000 in Friday's report.
It's a safe bet that any downside surprises for the foreseeable future will go over like a lead balloon in the current climate. But for the moment, we're off to a good start with today's Conference Board report. Then again, it's going to take sustained strength in the U.S. economy to offset what's shaping up to be a "fairly deep recession" in Europe, which looks set to take a toll on the Japanese economy.