Commentary

Consumer Confidence Surges to Highest Since 2002

Consumer Confidence Surges to Highest Since 2002

According to the Conference Board's Consumer Confidence Index, which increased sharply in June, it posted further gains in July, now standing at 106.1, up from 102.8 in June. The Expectations Index jumped to 105.8 from 100.8. The Present Situation Index edged up to 106.5 from 105.9 in June.

"Consumer confidence has now increased for four consecutive months, and is at its highest level since June 2002 when it registered 106.3," says Lynn Franco, Director of The Conference Board's Consumer Research Center. "The spring turnaround has been fueled by gains in employment, and unless the job market sours, consumer confidence should continue to post solid numbers."

Consumers' expectations for the next six months are somewhat mixed, but more optimistic than last month. Those anticipating conditions to worsen declined to 7.0 percent from 9.1 percent. Consumers expecting business conditions to improve remained relatively unchanged, 23.2 percent versus 23.5 percent in June.

And BIGresearch reports consumers on a positive note with a higher employment level than the previous month, not as inclined to pay down debt, not deferring purchases at the same level as the previous month, anticipating fewer layoffs over the next 6 months, and not as concerned with being laid off as he/she was in June. in July, consumer confidence zoomed to 48.1% after 4 months of a steady decline.

However, says the BIG study, consumer sentiment may be rising at home, but perhaps issues abroad have them more concerned with security this month...following last week's surprise early turnover of power to the Iraqi interim government, 24.3% say they worry more about political/national security issues, compared to 22.9% in June.

With increasing savings, says BIG, and paying off debt still on consumers' minds, it looks like they're taking advantage of sales and shopping discounters (it's STILL all about Wal-Mart) in order to make their hard-earned bucks stretch a bit further.

Retail Merchandise Categories - 90 Day Outlook

CategoryJune 04July 03
Children'sUPDOWN
Toys and GamesDOWNUP
Women's DressDOWNDOWN
CDs/DVDs/Videos/BooksFLATFLAT
Women's CasualDOWNDOWN
ElectronicsUP (slightly)UP
Men's DressFLATFLAT
GroceriesDOWNDOWN
Men's CasualDOWNDOWN
Home ImprovementDOWNDOWN
ShoesUPDOWN
Lawn & GardenDOWNFLAT
Home FurnitureDOWNUP
Dining OutDOWNFLAT
Decorative Home FurnishingsDOWNUP
Sporting GoodsDOWNUP
Linens/Bedding/DraperiesUP (slightly)UP

Source: BIGresearch, July 2004

But confidence in the stock market sees an uptick in July with investors, with 61.7% saying they will definitely/probably invest v. 59.6% in June. Slightly more investors ready to head back to Wall Street, as 13.3% plan to buy stocks in the next 3 months...those planning to sell down 1/2 point to 6.0%.

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