Research >> Economics
University of Michigan Consumer Confidence hovers near low
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Consumer confidence continued to hover near its half century low, showing no signs of significant change during the past six months. “Nearly all consumers anticipate the deepest and longest recession in the post-WWII era, but few consumers now expect the economy to sink into a 1930's style depression,” according to Richard Curtin, the Director of the Reuters/University of Michigan Surveys of Consumers. Job losses, declining work hours and smaller income gains were reported by consumers as well as falling home values and disappearing savings and pension accounts. Consumers have become defensive minded, protecting their future living standards through increased saving, even if it meant giving up some items, changing brand preferences or spending habits. “A recovery in consumer spending will require fiscal stimulus that effectively promotes job and income growth, monetary policies that restore credit flows, and actions that reestablish economic confidence,” Curtin said. Without each of these three legs in place, the recovery program will ultimately falter.
The 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. 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.
Posted: January 30, 2009 Friday 10:00 AM