The Thomson-Reuters University of Michigan (Go Blue!) survey of consumers saw its December 2014 “preliminary index of consumer sentiment” soar to 93.8 – well above last month’s 88.8 reading and also well above the 89.5 percent analysts were projecting. That’s the measure’s highest reading since December 2006 – and the fifth straight monthly uptick.
Unfortunately, this unbridledly optimistic sentiment has yet to translate into expanded retail activity …
As we’ve often noted, economists watch consumer sentiment closely because it often provides a glimpse of what consumer spending might do in the future. And of course consumer spending often provides a glimpse of what employment might do in the future. Which provides a glimpse of what incomes might do in the future.
Which of course leads us back to consumer sentiment …
It’s a vicious cycle when things are going poorly … and a churning engine when things are going well.
Most analysts agree falling gas prices are what’s fueling the rise in consumer confidence, although it remains to be seen whether the money freed up at the pump will actually boost the consumer economy or get sucked up by Obamacare.
Our hope? That the private sector – despite government’s best efforts to kill it with deficit spending, loose monetary policy, market-distorting crony capitalism and excessive regulation – will soon begin a genuine rebound. Not more of the jobless “recovery” we’ve been experiencing for the last five years.
Otherwise it’s going to be a tough road ahead for a lot of people …
UPDATE: Stocks were not impressed by the reading … -315.51 (-1.79 percent) on Friday.