Consumer confidence rises in December, but is still weak.

In the December 29, 2009 article "Consumer confidence rises in Dec, but still weak," Associated Press retail writer Anne D'Innocenzio reports:

NEW YORK – Americans are ending 2009 feeling better about the economy than when the year began, buoyed by optimism that job prospects will improve in the first half of 2010.

Consumer expectations for the job market reached their highest level in two years, but most people remain downbeat about their current prospects, according to a monthly survey released Tuesday. The survey also showed fewer people plan to buy automobiles and homes in the next six months compared with November.

"This doesn't mean that the economy isn't getting better, but it does raise doubts on how much actual improvement in the economy we've actually seen," said Mark Vitner, senior economist for Wells Fargo Securities in Charlotte, N.C.
If past recoveries from recession are a guide, the rebound of confidence will take many more months.

The Conference Board's Consumer Confidence Index rose in December for the second month in a row, to 52.9, from a revised 50.6 in November.

That's slightly higher than the 52.0 prediction of economists surveyed by Thomson Reuters, but still far short of the 90 that would signify a solid economy.

Economists watch the confidence numbers closely because consumer spending on goods and services accounts for about 70 percent of U.S. economic activity as measured by the federal government.

Without a marked turnaround in the job market, consumers will continue to "hunker down" and confidence will remain low, Vitner said.

The unemployment rate dipped in November to 10 percent, from a 26-year high of 10.2 percent in October. Some analysts worry it will start climbing again in coming months, perhaps rising as high as 10.5 percent next summer.

An uneven housing market is unlikely to help. The closely watched Case-Shiller home price index released Tuesday showed that a national index of home prices rose for the fifth month in a row in October, but only 11 of the 20 metro areas tracked showed gains.

The consumer confidence index hit a historic low of 25.3 in February after registering 37.4 in January and enjoyed a three-month climb from March through May, fueled by signs that the economy might be stabilizing.

Since June, it has bounced along anemically between 47 and 55 as rising unemployment has taken a toll.

The bright spot in December's confidence index was consumers' six-month outlook, which rose from 70.3 to 75.6, the highest level since December 2007. But the other main component, which measures shoppers' current assessment, fell to 18.8 from 21.2. That level remains at a 26-year low.

"Regarding income, however, consumers remain rather pessimistic about their short-term prospects, and this will likely continue to play a key role in spending decisions in early 2010," Lynn Franco, director of The Conference Board Consumer Research Center.

The survey revealed that the proportion of consumers anticipating an increase in their incomes declined from 10.9 percent to 10.3 percent.

The economy's health is riding on consumers. The overall economy as measured by the gross domestic product grew at an annual rate of 2.2 percent in the July-September quarter. That was the first positive performance for GDP after four consecutive quarters of decreases, and it marked the strongest sign to date that the recession that started in December 2007 has ended.

Economists expect GDP to show even stronger growth in the current October-December quarter, but the recovery could sputter in coming months if consumers, worried about jobs, decide to cut spending.

The problem is that it can take a long time for confidence to rebound. During the last recession in 2001, it took about two years for confidence to climb back to a healthier level of 90. The index peaked at 144.7.

In the early 1990s, it took three years for confidence to rebound to healthier levels because the economy was in a jobless recovery, similar to what's currently playing out.

The slight improvement in consumer sentiment could be seen in holiday shopping trends.

Shoppers spent a bit more than expected when adjusting for the extra selling day between Thanksgiving and Christmas this year, according to MasterCard Advisors' SpendingPulse, which track all forms of payment, including cash.

However, shoppers focused on practical items and bypassed gift cards, opting for discounted items instead.

Michelle Baran of Atlanta said the economy hit her hard because her boyfriend's pay was cut by 50 percent. The 43-year-old was at Atlanta's Lenox Square Mall on Tuesday returning clothes she had bought for herself.

"I feel like the economy is getting better," she said. "But the effects of the economy are still with me. I'm still being careful."

Consumer confidence improves slightly in November

In the November 24, 2009 article "Consumer confidence improves slightly in November," Associated Press retail writer Anne D'Innocenzio explains that economists look to consumers to reviving the lagging U.S. economy because their purchases account for about 70% of overall demand for newly produced goods and services:

NEW YORK – Americans' confidence in the economy improved slightly in November from October, but shoppers remain gloomy heading into the traditional start of the holiday shopping season amid a weak job market, according to a monthly survey.

The Conference Board, based in New York, said Tuesday that its Consumer Confidence Index edged up to 49.5, up from a revised reading of 48.7 in October. Economists surveyed by Thomson Reuters expected a reading of 47.7.

The index, which hit a historic low of 25.3 in February, had enjoyed a three-month climb from March through May, fueled by signs that the economy might be stabilizing. The road has been bumpier since June as rising unemployment has taken a toll on consumers. A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.

One component of the Conference Board's confidence gauge that measures consumers' assessment of the current economy fell slightly to 21.0, compared with 21.1 in October. The other that measures shoppers' outlook over the next six months increased slightly to 68.5 from 67.0 in October.

"Income expectations remain very pessimistic and consumers are entering the holiday season in a very frugal mood," said Lynn Franco, director of The Conference Board Consumer Research Center in a statement.

Economists watch consumer sentiment because spending on goods and services for consumers accounts for about 70 percent of U.S. economic activity by federal measures.

While the reading doesn't always predict short-term spending, it does serve as a barometer of spending levels over time, especially for big-ticket items.

Retail sales showed some signs of life in September and October, with major merchants collectively posting two consecutive monthly gains in sales in more than a year, according to the International Council of Shopping Centers-Goldman Sachs Index.

That followed more than a year of declines as shoppers shut their wallets tight. But business still remains weak and shoppers are still focused on necessities like socks, coats and underwear.

Experts say depressed spending is likely to persist for several years amid stubbornly high unemployment. The unemployment rate is now at 10.2 percent, the highest in 26 years, and 15.7 million Americans out of work. Meanwhile, the housing market has showed signs of improvement, but overall the sector is still tepid.

A housing report announced Tuesday showed home prices improved for the fourth straight month in September, though only in 11 out of 20 major metropolitan areas.

The Standard & Poor's/Case-Shiller home price index, which tracks prices in 20 major metropolitan markets, rose 0.3 percent in September.

The Conference Board's confidence survey, which is based on a representative sample of 5,000 U.S households, showed that shoppers' assessement of the job market remains weak. The cutoff for the preliminary results wsa Nov. 17. Those claiming jobs are "hard to get" increased to 49.8 percent from 49.4 percent, while those claiming jobs are "plentiful" decreased to 3.2 percent from 3.5 percent.

Consumers' short-term outlook improved slightly in November, but that's because those expecting conditions to worsen decreased to 15.1 percent from 18.2 percent, Franco said. The percentage of consumers expecting an improvement in business conditions over the next six months decreased slightly to 20.0 percent from 20.8 percent.

Those anticipating more jobs in the months ahead declined to 15.2 percent from 16.8 percent. But those expecting fewer jobs declined to 23.1 perent from 26.1 percent. The proportion of consumers expecting an increase in their incomes decreased to 10.0 percent from 10.7 percent.

Consumer confidence unexpectedly falls in Sept.

In the September 29 article "Consumer confidence unexpectedly falls in Sept.," Associated Press retail writer Anne D'Innocenzio reports that consumer confidence is lower than expected:

NEW YORK – Americans' worries about job security flared up in September, causing a widely watched barometer of consumer confidence to fall unexpectedly and raising more concern about the upcoming holiday shopping season.

The New York-based Conference Board, a private research group, said that its Consumer Confidence Index dipped to 53.1 in September, down from the revised 54.5 reading in August. Economists surveyed by Thomson Reuters had expected a reading of 57.

The index — fueled by signs that the economy might be stabilizing — had enjoyed a three-month climb since hitting a historic low in February of 25.3 but has been bumpy since June as rising unemployment has caught up with shoppers.

A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.

Economists watch consumer sentiment because spending on goods and services for consumers, including housing and health care, accounts for about 70 percent of U.S. economic activity by federal measures.

The Conference Board's Present Situation Index, which measures consumers' current assessment of the economy, declined to 22.7 from 25.4. The Expectations Index, which measures consumers' outlook over the next six months, dipped to 73.3 from 73.8 last month.

"While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes," said Lynn Franco, director of The Conference Board Consumer Research Center. "With the holiday season quickly approaching, this is not very encouraging news."

The big concern is the job market. Economists surveyed by Thomson Reuters project job losses slowed in September. On average, they predict 180,000 were lost this month, down from 216,000 in August. But Labor Department figures to be released this Friday are projected to show unemployment ticking up to 9.8 percent in September from 9.7 percent in August.

The weak job market, along with tight credit, has led shoppers to limit spending and focus on discounts when they do buy. Even those not worried about losing a job or finding a new one are embracing frugal behavior, buying only necessities and using more coupons.

Economists expect holiday sales to be at best flat from a year ago, the weakest holiday season since at least 1967 when the Commerce Department started collecting the data.

"Shoppers' habits have changed," said Frank Badillo, senior economist at consulting group TNS Retail Forward. "They remain focused on cutting back and trading down to discount retailers and to lower-priced brands. All of those behaviors are going to be enforced over the holidays."

Badillo projects sales for October through December won't change from last year, compared with the 4.5 percent decline last year from the year before.

The consumer confidence survey was sent to 5,000 households and had a cutoff date of Sept. 22.

The survey showed that consumers' appraisal of the job market was less favorable than the previous month. Those claiming jobs are "hard to get" increased to 47.0 percent from 44.3 percent, while those claiming jobs are "plentiful" decreased to 3.4 percent from 4.3 percent.

U.S. housing, confidence data point to recovery

According to the August 25, 2009 article "U.S. housing, confidence data point to recovery," Ros Krasny reports recent economic data suggest the current economic decline may be ending:

CHICAGO (Reuters) – Larger-than-expected gains in U.S. housing prices and consumer confidence on Tuesday lent new weight to views that the economy is emerging from the longest recession since the 1930s.

U.S. single-family home prices rose for the second month in a row in June, according to a closely watched index, and consumer confidence jumped in August.

In addition, President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve, removing some niggling doubt from investors' minds. The move promised a consistent approach to monetary policy in the years ahead.
The developments helped buffer the blow of projections for the U.S. budget deficit to reach its highest level in 2009, relative to the total economy, since World War Two.

"The recession appears to be over, with consumer attitudes lagging behind broad economic developments," said Steven Wood, chief economist at Insight Economics in Danville, California.

Major U.S. equities indexes closed higher after briefly hitting new 2009 highs on the day's events. Treasury bond prices initially fell as signs of a resurgent economy reduced interest in safer investments, but later rose after decent demand for an auction of two-year notes.

The Conference Board, an industry group, said consumer confidence climbed to a reading of 54.1 in August from 47.4 in July, handily beating forecasts, on an improved outlook for the job market and the overall economy.

The rise sent the index to its highest level since May. Still, some analysts warned not to get carried away.

"Confidence remains well below its historical average of 95 and it has not even regained the level of 61 seen before the collapse of Lehman almost a year ago," said Paul Dales, U.S. economist at Capital Economics in Toronto.

The weak labor market remains a sticking point to recovery, and especially a revival in consumer spending. Even the Fed has conceded the likelihood of a "jobless recovery," with the unemployment rate staying high long after growth resumes.

Americans saying that jobs were "hard to get" in August dropped to 45.1 percent from 48.5 percent but only 4.2 percent said jobs were plentiful.

"Most of the strength was in the 'expectations' component, so it looks like even though the near-term conditions are still a bit rocky, there is hope for the future," said Kim Rupert, managing director, global fixed income analysis, Action Economics LLC in San Francisco.

HOUSING PRICES IN BROAD-BASED GAINS

Other data supporting recovery hopes came from the Standard & Poor's/Case-Shiller housing price index. The housing market is considered a critical component to an economic recovery.

Prices of U.S. single family homes rose by 1.4 percent in June from May, after creeping up by 0.5 percent in April, suggesting the crippling housing slump is easing.

The Case-Shiller 10- and 20-city indexes have plunged by 54.3 percent and 45.3 percent, respectively, from their 2006 peaks.
June's improvement was broad based, with 18 of 20 metropolitan areas logging gains for the month.

"The most important take-away is the breadth of the rise," said Adam York, economist at Wells Fargo Securities in Charlotte, North Carolina. "The absolute worst is behind us."

Separately, the Federal Housing Finance Authority said U.S. home prices rose by 0.5 percent in June, according to its seasonally-adjusted monthly index, while prices fell by 0.7 percent in the second quarter.

"The S&P/Case-Shiller report dovetails with evidence from the FHFA house price index and the National Association of Realtors existing home sales report, suggesting that house price deflation has bottomed," said Anna Piretti, economist at BNP Paribas in New York.

BEN'S BACK

Bernanke's reappointment, while widely expected, was seen as a plus for markets that feared new uncertainty at a time the U.S. economic ship is finally righting itself.

Fed officials have warned that politicizing the U.S. central bank risked higher long-term interest rates as investors began to fear higher inflation taking root.

"Were Bernanke to be denied a second term in favor of, say, a current White House 'insider,' this would inevitably add to concerns about the blurring of lines between fiscal and monetary policy and the potential compromising of Fed independence," said strategists at analysis firm 4CAST Ltd.

For the time being, though, Bernanke & Company still face deflationary pressure from the huge "output gap" in the U.S. economy created by the deep recession.

"The news that the deflation-conscious Bernanke is going to be at the helm .... provides tentative support to our view that the zero-interest rate policy will remain in place until 2011 at the earliest," said Capital Economics' Dales.

The nonpartisan Congressional Budget Office (CBO) on Tuesday gave updated projections on the likely U.S. budget deficit in fiscal 2009 and beyond.

Spiraling deficit forecasts stretching far into the future have been cited as one element behind a dip in Obama's polling numbers, as Americans start to fear that tax hikes will almost inevitably follow.

The CBO forecast a fiscal 2009 deficit at $1.59 trillion, or 11.2 percent of projected gross domestic product, falling to $1.4 trillion or 9.6 percent of GDP in 2010.

It gave a 10-year deficit forecast of $7.14 trillion against $9.1 trillion.

Separately, the White House raised its forecast for the budget deficit between 2010 and 2019 to a total of about $9 trillion.

U.S. consumer confidence sees biggest jump in 6 years

U.S. consumer confidence sees biggest jump in 6 years

By Pedro Nicolaci da Costa
Tue May 26, 10:17 am ET
NEW YORK (Reuters) – U.S. consumer confidence soared in May to its highest level in eight months as severe strains in the labor market showed some signs of easing, though Americans' moods remained depressed by historical standards.

The Conference Board, an industry group, said on Tuesday its index of consumer attitudes jumped to 54.9 in May from a revised 40.8 in April, the biggest one-month jump since April 2003. Economists had been looking for a much smaller rise to 42.0.

Fewer Americans said jobs were "hard to get," the survey found, with that measure slipping to 44.7 percent from 46.6 percent. Those saying jobs were plentiful climbed to a still meager 5.7 percent, but that was still higher than April's 4.9 percent.
"Consumers are considerably less pessimistic than they were earlier this year," said Lynn Franco, director of The Conference Board's Consumer Research Center.

The data was in line with other evidence suggesting that, while the economy continues to contract in the current quarter, the pace of deterioration has abated somewhat.

U.S. stocks extended their rally after the data, with the Dow Jones industrial average up 120 points or 1.5 percent.

The survey offered mixed messages regarding Americans' propensity to spend money. The proportion of those who said they planned on buying a car over the next six months rose to 5.5 percent, its highest in at least a year.

But fewer intended to buy homes -- only 2.3 percent, a tough break for one of the hardest hit sectors in the country's economic crisis. A separate report on Tuesday revealed U.S. home prices dropped 18.7 percent in March compared to a year earlier.

(Reporting by Pedro Nicolaci da Costa, Editing by Chizu Nomiyama)