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Notes to myself, possibly of interest to others.
-- Bill Northlich

Wednesday, March 30, 2011

Consumer confidence down

Following in the footsteps of the University of Michigan survey, the Conference Board survey showed an 8.6 point slide in consumer confidence in March to a three month low of 63.4. Out of the nine regions, seven were down, one was up and one was flat. Interestingly, even with all the bad global news, the “present situation” component managed to rise from 33.8 to 36.9 in March, the best print since November 2008. But what drives consumer spending is the “expectations” component, and it sank to 81.1 from 97.5, a four-month low. The “jobs are plentiful” index fell to 4.4 from 4.9, while “jobs hard to get” rose to 44.6 from 44.4. So all in, the net jobs index deteriorated 0.7 of a point and suggests that we should at least see a rebound in the unemployment rate in Friday’s jobs report.  Buying plans were down right across the board: Home buying plans have gone from 5.2% in January, to 4.9% in February, to 3.8% in March. Auto intentions sagged to 10.9% from 12.8% in February. Plans to buy a major appliance took a real licking — down to 42% from 47.5%, while vacation plans sagged to 45.5% from 51.1%. This is a tale of woes as it pertains to the outlook for discretionary consumer spending...

There is the old saying of how one should focus on what consumers do as opposed to what they say they will do. But we are seeing real consumer spending running at a 1% annual rate so far in Q1, which is well below the 4% pace in the fourth quarter. And the chain store sales data are coming in below plan ― so far +2.2% YoY versus +2.5% planned. Discount stores are surprising on the upside, department stores on the downside.


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