Consumer Confidence Not Matched by Reality

By:  Bob Adelmann
Consumer Confidence Not Matched by Reality

A closer look behind the Conference Board's rosy consumer confidence survey released on Monday reveals an economy, at the individual and family level, that hardly merits such optimism.

The consumer confidence numbers announced on Tuesday by the Conference Board surprised the economists who had expected a decline rather than the nearly 10-point increase that the board reported. The index came in at 81.4 compared to economists’ expectations of 74

The board said that both the “present situation” index and the future “expectations index” had increased as well, along with consumers’ assessment of business conditions and the job market. Lynn Franco, a director at the Conference Board, summarized the findings:

Consumer confidence increased for the third consecutive month and is now at its highest level since January 2008. Consumers are considerably more positive about current business and labor market conditions than they were at the beginning of the year.

Expectations have also improved considerably over the past several months, suggesting that the pace of growth is unlikely to slow in the short-term, and may even moderately pick up.

In all, it was a positive, albeit surprising, report. When MarketWatch asked for opinions, they found Stephen Stanley of Pierpont Securities to give his take:

With the unemployment rate creeping lower, home prices surging and, until recently, stock prices moving higher, household finances have gotten better.

Stanley may have gotten a little ahead of himself, or else didn't see the report from that showed that most Americans are living paycheck-to-paycheck. After polling 1,004 adults, noted that more than one in four Americans have no savings whatsoever, while nearly 44 percent have just three months’ savings or less. Only one in four stated they had enough in savings to last for six months or more if they had to.

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