Tuesday, May 29, 2012

Consumer Confidence: Has It Hit A Plateau?

The Lehmann Letter (SM)
Uh Oh……..

This letter has remarked on consumer confidence’s rise from recession’s trough. And it had. But now matters are not so clear.

This morning The Conference Board announced that consumer confidence, ”,,, declined slightly in April, (and) fell further in May. The Index now stands at 64.9 (1985=100), down from 68.7 in April.”

That wouldn’t be too bad except that April’s reading was about the same as March’s. The chart reveals that we haven’t been able to break through 70 when we should be heading toward 100.

Consumer Confidence
(Click on chart to enlarge)

(Recessions shaded)

Household spending can’t recover strongly If consumer confidence remains in the doldrums.

What’s wrong? Let’s round up the usual suspects: Slow job growth & high unemployment, stagnant wages, the jump in fuel prices.

This letter would like to beat its habitual drum: Weak consumer balance sheets and (therefore) moribund housing and (therefore) it's hard to be confident.

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

© 2012 Michael B. Lehmann

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