The U.S. Conference Board, a private New York-based research group, reported within the past hour that its Consumer Confidence Index had jumped up strongly this month, registering a reading of 71.3 for September. That was well above expectations of 65.0 and better than the August reading of 61.3. (Initially, the August tally had been estimated at 60.6.)
This strong performance, which put the index at its highest point since February, when the reading had registered 71.6, was a nice shot in the arm for an economy that has been laboring for much of the year. In fact, as we approach the final quarter of 2012, the lone area of consistent strength in the domestic arena seems to be the housing sector, where earlier today the S&P/Case Shiller Home Price Index noted that real estate prices had climbed in July, the latest month covered by this survey, in both the 10- and 20-City Composites covered by this data.
Meanwhile, as to the Consumer Confidence Index, the present situations index, which is a key component of this overall survey and tends to be less optimistic than the composite reading, also rose for the month, increasing to a reading of 50.2. That was better than the August tally of 46.5, which had been initially estimated at 45.8. At the same time, consumer expectations for economic activity over the next six months jumped to 83.7 from a revised 71.1, originally reported as 70.5. This component, which tends to be the most upbeat sector within the total survey, is also at its highest level since February.
Helping to solidify confidence this month is growing optimism on the employment front. While there is little hard evidence to point to on this score, as jobless claims and non-farm payroll data remain pedestrian, at best, there is some sense that with housing and the stock market strongly on the mend that businesses will be hiring more as they seek to ready themselves for the next possible areas of economic strength. At least that seems to be what some Americans are banking on at this time.
As to commentary on this surprisingly good report Lynn Franco, the Director of Economic Indicators at the Conference Board intoned that: "The Conference Board Index rebounded in September and is back to levels seen earlier this year.'' She also noted that "Consumers are more positive in their assessment of current conditions, in particular the job market, and considerably more optimistic about the short-term outlook for business conditions, employment, and their financial situation.''
Summing up this report, there was little not to like here, as there seems to be some expectation among consumers that the U.S. economic landscape will soon brighten. We caution that there have been periods of optimism before during this frustratingly slow economic revival, only to see them dissipate shortly thereafter. Our sense is that some of this optimism on the jobs front will need to be realized in hard numbers for this more positive view of things to be sustained.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.