Tuesday, January 31, 2012

Consumer Confidence: The Historical Context

The Lehmann Letter (SM)

Today's consumer confidence report from The Conference Board illustrates the importance of placing recent data in historical context:


Consumer Confidence

(Click on chart to enlarge)

(Recessions shaded)

Update the chart in your mind's eye with January's 61.1 reading and December's 64.8 figure.

Both reports bring the index back to about 60 and offset last fall's brief downturn.

But you can see the clear upward trend from recession lows. And you can also see that 100 or more, such as we enjoyed in 2005, is a prosperous reading.

These observations put matters in perspective. The important point is not that consumer confidence fell a little from December to January. The key insight is that consumer confidence has clearly advanced from its recession lows and must continue that advance for quite some time before we can be pleased with the progress.

(To be fully informed visit http://www.beyourowneconomist.com/)

© 2012 Michael B. Lehmann

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