There is a monthly report the Conference Board comes out with showing in August the consumer confidence metric index gauge has gone up a couple points. The simple gain gave the stock exchange a jolt into optimistic territory Tuesday morning.
More of a consumer confidence that expected
August reports show consumer confidence levels increasing. This was not expected. Bloomberg showed that a five month low of 51 points in the consumer confidence index was shown in July while in August it went up to 53.5. This shows that the economy may actually be getting better instead of going down as everyone expected. The increase didn’t necessarily mean anything, an economist said to Bloomberg. It was nevertheless at a “stunningly low level” in August. Consumer spending is 70 percent of the U.S. overall economy and may recover with the small bit of hope from the higher confidence. Soon, there may be more hiring. Businesses need to do this. From May to July, 51,000 jobs were created, which is down from 200,000 the last two months, reports the Labor Department.
Details of the consumer confidence report
There were other information distributed by the Conference Board besides the consumer confidence index. MarketWatch reports that more consumers are pessimistic about the present situation of the economy, yet optimistic that conditions will improve. The Conference Board’s present-situation index — a measure of attitudes about business climate and job opportunities — dropped to 24.9 in August from 26.4 in July. There is also the expectations index showing where the community expects the business climate and job creation to go which went up from 67.5 in July to 72.5 in August. 1.9 percent to 2 percent was how the consumers preparing to purchase a home moved. People planning to buy an automobile rose to 5 percent from 4.7 percent. An economist told MarketWatch that despite the August gains, consumer confidence is at “incredibly depressed levels,” in contrast to previous monetary recoveries.
Consumer spending may not happen with index increase
To know your economic system is healthy, you should have a consumer confidence over 90. This was explained by the Associated Press. Yet the August bump put the brakes on a sliding stock market Tuesday morning. Every point falling on the New York Stock Exchange meant two stocks rose. Like all recent market rallies, this one is expected to be short-lived. Most economic reports show economic growth is slowing, and the slight uptick in consumer confidence doesn’t guarantee an increase in consumer spending. Personal finance shows that it is good that unemployment is moving more individuals to save and reduce debt. Unless more people pull money out of their pockets to spend, there may be a double dip recession. This would only happen with more job creation.
Further reading
Bloomberg
bloomberg.com/news/2010-08-31/consumer-confidence-in-u-s-rose-more-than-economists-forecast-in-august.html
MarketWatch
marketwatch.com/story/august-consumer-confidence-rises-to-535-2010-08-31-102600
Associated Press
google.com/hostednews/ap/article/ALeqM5jmT59dgLTTziX4p9X9MRBRpWZGdQD9HUH2I80
