Uncomfortable in the Present, Consumers Optimistic About the Future

• by Jack Loechner , Staff Writer @mp_research, January 5, 2010

The Consumer Confidence Survey, recently released by The Conference Board and TNS, based on a representative sample of 5,000 U.S. households, rose again in December. The Index now stands at 52.9 (1985=100), up from 50.6 in November. The Expectations Index increased to 75.6 from 70.3 last month. The Present Situation Index, however, declined to 18.8 from 21.2 in November.

Lynn Franco, Director of The Conference Board Consumer Research Center, says that "... expectations for the short-term future increased to the highest level in two years... The Present Situation Index, however... remains at a 26-year low... A more optimistic outlook for business and labor market conditions was the driving force behind the increase in the Expectations Index... however, consumers remain rather pessimistic about their short-term (income) prospects and this will likely continue to play a key role in spending decisions in early 2010."

Consumers' assessment of current-day conditions declined further in December:

• Those claiming business conditions are "bad" increased to 46.6% from 44.5%
• Those claiming conditions are "good" decreased to 7.0% from 8.1%
• Those claiming jobs are "hard to get" decreased to 48.6% from 49.2%
• Those claiming jobs are "plentiful" decreased to 2.9% from 3.1%.

Consumers' short-term outlook improved in December. Those anticipating business conditions will improve over the next six months increased to 21.3% from 19.7%, while those expecting conditions will worsen decreased to 11.9% from 14.6%.

The outlook for the labor market was also more upbeat. The percentage of consumers expecting more jobs to become available in the months ahead increased to 16.2% from 15.8%, while those expecting fewer jobs decreased to 20.7% from 23.1%. The proportion of consumers anticipating an increase in their incomes decreased to 10.3% from 10.9%.

Several other recent future-looking consumer indices also demonstrate hope for a better 2010 on the part of US consumers, reports Marketing Charts. The Conference Board's Leading Economic Index (LEI), which measures economic activity for the next six months, increased 0.9%, from 104 to 104.9, in November 2009. This follows a 0.3% increase in October and 1.2% increase in September, and marks the LEI's eighth straight month of growth following 20 straight months of decline.

The Conference Board Coincident Economic Index (CEI), which measures current economic activity, increased 0.2%, from 99.9 to 100.1, following flat performance in October and a fractional decrease in September. A score of 100 marks the performance level of both the LEI and CEI in 2004.

The Deloitte Consumer Spending Index, which attempts to track consumer cash flow as an indicator of future consumer spending, rose 8.9% in November 2009, following a 15.7% jump in October and an 11.6% hike in September 2009.

In addition, the American Express Spending & Saving Tracker indicates that in the next 30 days, 32% of consumers will spend more than they did in the last 30 days, and another 33% will spend the same as they did in the last 30 days. A majority of these consumers are spending the same or more due to holiday shopping-related expenses.

To read the Conference Board report, please visit here, and for the Marketing Charts summary, go here.