Consumer Confidence
 

Most of us have probably heard that consumer confidence has been growing since it bottomed out. In most recessions, this would be great news. But in THIS recession, it doesn't mean much.

Yet a report released today shows that consumer spending declined 4.8% in May. If you expected different, you were kidding yourself. Why? Because consumers are tapped out...they have no credit and little discretionary income.

All the confidence in the world isn't going to give people jobs or get them spending. And there won't be any new jobs created by confidence. The only thing that will do that is SPENDING.

"Sales tracker Thomson Reuters, which tracks monthly same-sales for 30 retail chains, said overall May sales for the group fell a worse-than-expected 4.8%, compared to a gain of 1.1% last year.

Same-store sales, a key gauge of a retailer's performance, measures sales at stores open at least a year.

The firm had initially forecast May sales to decline 4.1%. Of these merchants, 63% missed analysts' sales estimates, 33% beat and 4% met their forecasts.

The jump in consumer confidence numbers in May had raised hopes of a much-need rebound in consumer spending, which is responsible for fueling two-thirds of the nation's economy.

But that did not materialize."

http://money.cnn.com/2009/06/04/news...ion=2009060410

Re: Consumer Confidence
 

I never put much stock in consumer confidence. How people feel means little to me. What people actually do is what matters.

Re: Consumer Confidence
 

People in Dallas are pretty confident in Tony Romo each August...but come December...

Re: Consumer Confidence
 

Point of note: First you wrote "consumer spending declined 4.8% in May". Further down you elaborated that that report "tracks monthly same-sales for 30 retail chains".

That's my pet peeve. The MSM, and as a result most people, think the Dow Jones Industrial Average is "the stock market", when it too only is composed of 30 companies.

Re: Consumer Confidence
 

It wasn't my comment, I was just repeating what the article says. What you read in quotes was taken directly from the article, so I didn't elaborate on anything really.

shmessy, if consumers aren't spending in retail outlets like KMart, WalMart, Macy's, Sears and Best Buy, then it's logical and probable that they're not spending money on big ticket items either.

Although this report is only on a few sectors of consumer spending, it has been a very accurate gauge of overall consumer spending for years.

Re: Consumer Confidence
 

"Spending" does not necessarily mean only retail. The report only addresses large chain retail.

What about E-Bay, or local farmers markets, etc?

I'm not saying that those aren't down either, but it would be better to get a more encompassing study than just the top 30 retailers when using the term "consumer spending" in general.

Re: Consumer Confidence
 

Actually, food retailer sales are up. But it's only because restaurant business is down significantly. I understand your point, but it's tough for companies to track 1,000 companies across multiple businesses every month.

Remember, each company has to agree to share their data and many don't want to.

P.S. Vitamin sales continue to grow at a significant rate (over 10%) YTD. It's surprising the hell out of me!

Re: Consumer Confidence
 

Anyway, the CCI and current month spending is univerally understood (evidently, except for the CNN-Money writer) as two non-simultaneous measurements.

I.E.

Let's say there's a husband and wife where one spouse has been laid off for 12 months. They have to cut back greatly and still incur some debt just to get by. Let's say that the spouse finally landed a job this week for MORE money than he/she had been making previously and in a more lifestyle-friendly job. Result?

1) This couple is feeling pretty damn confident.
2) They are not increasing their spending for at least a year until they dig themselves out of the debt they incurred over the previous year.

CCI is a FORWARD measurement (i.e. like the Index of Leading Indicators)
Consumer Spending is a PRESENT measurement

Re: Consumer Confidence
 

Hey, don't look a gift horse in the mouth! ;)

Re: Consumer Confidence
 

I fully understand.

The CNN-Money "journalist" however, should not mislead the term "consumer spending" so eggregiously.