Tuesday, February 07, 2006


Despite a slower housing market consumer confidence continued to rebound in January and is now at its highest level since June 2002, according to The Conference Board's Consumer Confidence Index. The Index rose 2.5 points last month and now stands at 106.3 (1985=100). The Present Situation Index also increased, climbing to 128.4 from 120.7, while the Expectations Index declined to 91.5 from December's reading of 92.6.

A more positive view of the job market continues to boost consumers' confidence, though there is a disparity between consumers' assessment of current conditions and their expectations for the future, according to The Conference Board's report. While the proportion of consumers claiming jobs are "plentiful" increased in January, their outlook for the labor market in the coming months was less optimistic.
Naturally, with all this confidence the stock market fell. Too many jobs for too few people may cause inflation creep. Investors prefer a more pessimistic attitude.
We put too much emphasis on this monthly confidence survey. Questioning people about how they generally feel about things at a moment in time has about as much scientific relevance to the economy as asking them if they had a good night’s sleep or did they have a nice day at the office. A confidence feeling is too subjective and personalized.
My level of confidence about the economy can change within a few minutes. Last night I received a call from the seller of a home in Folsom saying they decided to accept my buyer’s offer. Great, fantastic, my confidence level on my economic future was high. If I had received a call from a “confidence surveyor” at that time my outlook on the economy would have been rosy. I then called my client to say congratulations! His offer was accepted. My buyer, however, had changed his mind, about buying the new home. He had decided to “wait and see” where the market was headed. This quickly changed my confidence level about where I was headed financially. Maybe if I e-mail him a this confidence level survey he will reconsider.


Post a Comment

<< Home