In August, the consumer confidence index metric gauge went up a couple bumps for the Conference Board’s monthly report. This made a difference stock market Tuesday. The stock market actually went up.
Better outlook with consumer confidence index
August reports show consumer confidence levels rising. This was not expected. July the consumer confidence was 51 while in August it went up to 53.5 showing the overall economy may be getting far better instead of staying the same, reports Bloomberg. Bloomberg spoke to an economist that said the August consumer confidence level was nevertheless a “stunningly low level,” despite the increase. Even so, higher confidence brings a ray of hope that consumer spending — 70 percent of the U.S. overall economy — will recover. Soon, there may be more hiring. Companies need to do this. Yet as outlined by the Labor Department, corporations created an average of 51,000 jobs from May via July — down from 200,000 the previous two months.
Details of the consumer confidence report
In addition to the consumer confidence index, the Conference Board report contains other information. MarketWatch reports that more consumers are pessimistic about the present situation of the economy, yet optimistic that conditions will improve. There was a drop within the Conference Board’s present-situation index from 26.4 in July to 24.9 in August, which shows the opportunities and business climate and people’s attitudes toward it. There is also the expectations index showing where the community expects the business climate and job creation to go which went up from 67.5 in July to 72.5 in August. 1.9 percent to 2 percent was how the consumers preparing to purchase a home moved. People planning to buy a vehicle rose to 5 percent from 4.7 percent. An economist told MarketWatch that despite the August gains, consumer confidence is at “incredibly depressed levels,” compared with previous economical recoveries.
Bump in index doesn’t guarantee consumer spending
The Associated Press explains that a healthy economy typically runs under a consumer confidence report over 90. The change in August still created other change. This change was in the stock exchange, of course. Each point falling on the New York Stock Exchange meant two stocks rose. Like all recent market rallies, this one is expected to be short-lived. Most economic reports show economic growth is slowing, and also the slight uptick in consumer confidence doesn’t guarantee an increase in consumer spending. A high unemployment rate continues to motivate consumer saving and debt reduction — behavior considered virtuous from a personal finance standpoint. Unless more individuals pull cash out of their pockets to spend, there may be a double dip recession. This would only happen with more job creation.
Bloomberg
bloomberg.com/news/2010-08-31/consumer-confidence-in-u-s-rose-more-than-economists-forecast-in-august.html
MarketWatch
marketwatch.com/story/august-consumer-confidence-rises-to-535-2010-08-31-102600
Associated Press
google.com/hostednews/ap/article/ALeqM5jmT59dgLTTziX4p9X9MRBRpWZGdQD9HUH2I80
