Consumer confidence continues its recovery
July 9, 2001,
Consumer confidence continued to crawl upwards from the recession-level depths it experienced earlier this year.
As has been the case for several months, the main booster engine for consumer confidence has been six-month expectations. The expectations index, one of the main index's two chief components, rose to 93.2 in June from 87.1 in May — meaning that economic matters over the next six months look upbeat to the 5,000 consumer households that responded to the monthly survey.
Other results underscored this optimism. More consumers, 17.1 percent in June compared with 16.8 percent in May, felt business conditions would improve in the next six months. Also, 15.6 percent of the June respondents expect more jobs to be available in the next six months, compared with 14.1 percent in May.
Judging from the June results, the future looks better than the present to the survey's respondents. The present situations index, the second of the two major component indices, fell in June to 154.8 from the 159.6 in May.
Yet, according to Lynn Franco, director of The Conference Board's consumer research center, "While their assessment of current conditions weakened, the present situation index remains at historically high levels. There is little reason to believe consumers will drastically halt their spending habits, and also little reason to expect consumers to go on shopping binges."
Robert Podorefsky, analyst with Fleetmarkets, noted that the June index was the highest it had been since December — although "confidence remains a shadow of its former self" compared with last year, when the index hit historical highs.
Observing that the May housing data also seems to reflect high consumer confidence, he added, "When people buy homes, they're making a bold statement about confidence."
Responding to another aspect of The Conference Board's survey, Michael Niemira, analyst with Bank of Tokyo Mitsubishi, said, "One of the reasons for the improvement in expectations is a receding concern about inflation.
Franco stated, "The economy should continue to expand at its current slow rate."
Consumer confidence by region
|East North Central||+1.9|
|West North Central||-6.0|
|East South Central||+7.6|
|West South Central||+3.9|