The Conference Board’s monthly report on its consumer confidence index showed the metric utilized to gauge economic outlook actually bumped up a couple of points in August. This is the reason the stock market went up Tuesday.
Better outlook with consumer confidence index
August reports show consumer confidence levels increasing. This wasn’t expected. Bloomberg showed that a five month low of 51 points within the consumer confidence report was shown in July while in August it went up to 53.5. This shows that the overall economy may really be getting improved instead of going down as every person expected. The increase didn’t necessarily mean anything, an economist said to Bloomberg. It was nevertheless at a “stunningly low level” in August. Even so, higher confidence brings a ray of hope that consumer spending — 70 percent of the U.S. economic system — will recover. To do that, corporations need to start hiring more. From May to July, 51,000 jobs were created, which is down from 200,000 the last two months, reports the Labor Department.
Information of the consumer confidence report
The consumer confidence index wasn’t the only thing the conference Board report gave. There were also a lot of other details given. MarketWatch made a report on this. Apparently, consumers hope the economy will get much better although they know the overall economy is really bad right now. The present-situation index is the Conference Board’s way of measuring attitudes toward job opportunities and the business climate. It has dropped from 26.4 in July to 24.9 in August. The report also shows what the expectations for a better business climate and more jobs creation are, which is called the expectation index. It really went up from July to August from 67.5 to 72.5. There was a slight change within the amount of consumers preparing to purchase a home in the next six months. It changed from 1.9 percent to 2 percent. Before, only 4.7 percent planned to buy a vehicle. Now, there are 5 percent of people planning a car. Consumer confidence is still at “incredibly depressed levels,” even with the august gain, says an economist to MarketWatch.
Bump in index doesn’t guarantee consumer spending
A consumer confidence index above 90 indicates a healthy economy, as outlined by the Associated Press. Tuesday morning, there was still a change within the stock market due to the August bump. About two stocks rose for every one that fell on the New York Stock Exchange. This likely won’t last for long. Consumer spending may not increase though with the consumer confidence increase considering monetary reports typically show that economical growth is going really slowly. Personal finance shows that it is good that joblessness is moving more people to conserve and reduce debt. The U.S. overall economy might end up in a double-dip recession if more people don’t get jobs and start spending again.
Additional 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
