The Conference Board’s monthly report on its consumer confidence report showed that the metric used to gauge financial perspective really bumped up a number of points in August. The humble gain gave the stock market a jolt into good territory Tuesday morning.
More of a consumer confidence that expected
August reports show consumer confidence levels rising. This was not expected. Bloomberg showed that a five month low of 51 points within the consumer confidence report was shown in July when in August it went up to 53.5. This shows that the overall economy may really be getting far better rather than going down as everyone expected. The increase didn’t necessarily mean anything, an economist said to Bloomberg. It was still at a “stunningly low level” in August. Consumer spending is 70 percent of the U.S. economy and may recover with the small bit of hope from the higher confidence. To do that, businesses have to start hiring more. Yet according to the Labor Department, businesses 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 details. MarketWatch made a report on this. Evidently, consumers hope that the economy will get better although they know the economic system is really bad right now. 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. The expectations index — a measure of expectations for a better business climate and more job creation — rose to 72.5 in August from 67.5 in July. Consumers preparing to purchase a home within six months moved to 2 percent from 1.9 percent. People planning to purchase an automobile rose to 5 percent from 4.7 percent. Consumer confidence is nevertheless at “incredibly depressed levels,” even with the august gain, says an economist to MarketWatch.
Bump in index doesn’t guarantee consumer spending
The Associated Press explains that a healthy economy usually runs under a consumer confidence index over 90. The change in August still created other change. This change was in the stock exchange, of course. There was a two stock increase for each decrease on the New York Stock Exchange. This was amazing. Like all recent market rallies, this one is expected to be short-lived. Most economic reports show economic growth is slowing, and the slight uptick in consumer confidence doesn’t guarantee an increase in consumer spending. A high joblessness 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
