A Modest Improvement In Consumer Confidence
Doug Short | May 27, 2015 12:33AM ET
The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through May 15. The headline number of 95.4 was a small increase from the revised April final reading of 94.3, a slight revision from 95.2. Today's number was slightly below the press release .
“Consumer confidence improved modestly in May, after declining sharply in April,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “After a three-month slide, the Present Situation Index increased, propelled by a more positive assessment of the labor market. Expectations, however, were relatively flat following a steep decline in April. While current conditions in the second quarter appear to be improving, consumers still remain cautious about the short-term outlook.”
Putting the Latest Number in Context
The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.
On a percentile basis, the latest reading is at the 51% level of all the the monthly data points since June 1977. That's an increase from 49% previous month.
For an additional perspective on consumer attitudes, see the most recent Reuters/University of Michigan Consumer Sentiment Index . Here is the chart from that post.
And finally, let's take a look at the correlation between consumer confidence and small business sentiment, the latter by way of the National Federation of Independent Business (NFIB) Small Business Optimism Index . As the chart illustrates, the two have tracked one another fairly closely since the onset of the Financial Crisis.
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