Consumer Confidence Index Rebounds in April (Includes Take from Dr. Joe Webb)
Press release from the issuing company
April 29, 2003 -- The Conference Board's Consumer Confidence Index, which had been on the decline for the past four months, improved sharply in April. The Index now stands at 81.0 (1985=100), up from 61.4 in March. The Expectations Index rose to 84.8 from 61.4. The Present Situation Index improved to 75.3 from 61.4.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by NFO WorldGroup, a member of The Interpublic Group of Companies.
“The swift outcome in the Middle East has helped quell consumers’ short-term concerns,” says Lynn Franco, Director of The Conference Board’s Consumer Research Center. “While an increase of this magnitude occurred after the Persian Gulf War in 1991, this post-war surge differs in that both components of the Index posted gains. The increase in the Present Situation Index, especially in labor market conditions, may very well signal a turnaround in confidence and a more favorable outlook for consumer spending.”
Consumers' assessment of current conditions was less negative than in March. Those rating present business conditions as "bad" declined to 23.7 percent from 30.0 percent, while those holding the opposite view rose to 16.2 percent from 13.6 percent. Labor market conditions also improved. Consumers reporting jobs are hard to get declined to 29.5 percent from 32.3 percent, while those claiming jobs are plentiful edged up to 13.0 percent from 11.4 percent.
Consumers’ short-term expectations improved considerably. Those anticipating an improvement in business conditions over the next six months rose to 18.7 percent from 13.0 percent. Consumers anticipating conditions to worsen dropped to 12.3 percent from 20.0 percent.
The employment outlook was also more optimistic. Consumers anticipating more jobs to become available increased to 16.7 percent from 10.8 percent, while those expecting fewer jobs fell to 20.9 percent from 26.5 percent. The proportion of consumers anticipating an increase in
their incomes rose to 17.1 percent, from 15.8 percent.
Free WTT Analysis: Below is a quick take on this news from Dr. Joe Webb. Premium Access Members can view more analysis in his weekly column on Friday, appropriately called “Fridays with Dr. Joe”.
"The Conference Board's consumer confidence index shot up to 81, when analysts were expecting around 70, and the prior number was 61. Reports said that this steep increase was caused by the shortness of the military action in Iraq. We should have suspected that the confidence measurement was going to be good because personal income and personal spending figures released earlier this week exceeded expectations, as did the GDP growth released last Friday.
"The consumer has been strong throughout this downturn, and that’s not likely to change, as other signs are starting to appear that imply we are finally coming off the bottom of our economic problems. While there was panic over the employment cost index, this figure always has to be viewed with productivity data, which have been quite good. The better than expected GDP and other data imply that productivity more than pays for employment cost increases. People are supposed to be paid more when they are more productive! The biggest concern around employment cost was the increase in benefits costs, which in some industries was twice the rate of the increase in wages.
"If the economy is actually on the upswing, you can ignore the employment data, anyway, since it is a lagging indicator. Employment will come back only when the positive economic news is firmly set into the normal course of business."
On the Web: http://www.bls.gov/news.release/pdf/eci.pdf
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