Two separate indexes are maintained regarding consumer confidence. One is reported by the Reuters/University of Michigan Surveys of Consumers and the other by the Conference Board.
The Conference Board Consumer Confidence Index™, which had decreased in December, inched lower in January and continues to be at a historic low. The Index now stands at 37.7 (1985=100), down from 38.6 in December. The Present Situation Index declined slightly to 29.9 from 30.2 last month. The Expectations Index decreased moderately to 43.0 from 44.2.
HOWEVER, the University of Michigan Index of Consumer Sentiment was 61.2 in the January 2009 survey, just above the 60.1 in December but substantially below last January’s 78.4 and the cyclical peak of 96.9 set in January 2007 (what a difference a couple of years makes!). Presidential honeymoons have typically translated optimistic expectations for policy changes into early gains in consumer confidence, and the recent surveys indicate a small gain since the November low of 55.3. The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, was 57.8 in January, just ahead of the 54.0 in December and well below last January’s 68.1and the January 2007 cyclical peak of 87.6.
Regardless of your index of choice, consumers are not optimistic heading into spring. That’s why our flowers, plants, and trees are so important in terms of being the antidote for the doom and gloom. Sooner or later, the money from increased saving is going to start burning a hole in people’s pockets and we need to be ready when it does!