As the U.S. equity markets set new highs for the year, consumer confidence continues to show signs of stabilization. The Reuters/University of Michigan Surveys of Consumers said its preliminary index of consumer sentiment for September rose to 70.2, the highest since June, from 65.7 in August. This was above estimates expecting a reading of 67.3, and roughly back to the level of September 2008, which was 70.3.
The Current Economic Conditions Index rose to 71.8, up from 66.6 in August and 75.0 last September. The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, was 69.2, up from 65.0 in August and above the 67.2 recorded last September.
Within the survey, the 12-month economic outlook index rose to 79, the highest since September 2007, from 69 in August. The 1-year inflation expectation eased to 2.6, the lowest since March, and down from 2.8 in August.
“Confidence rebounded in early September as consumers increasingly expected the economy to improve despite their reluctant conclusion that their own financial situation would remain quite problematic for some time,” the Reuters/University of Michigan Surveys of Consumers said in a statement.
Because of unemployment worries and lack of income gains, improved confidence has yet to translate into increased spending. If we look at results from the consumer survey going back over 50 years, we see that confidence remains at extremely low levels. Though we appear to be emerging from the longest post-war recession, now entering its 22nd month, consumers have a long way to go before they will be comfortable spending again.
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