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Consumers Aren’t Spending But …

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… THEY’RE BUYING THE HYPE

|| By FITSNEWS || Never mind that shrinking workforce … or those stagnant income levels … or that sluggish retail economy.

Americans pulled a “Stuart Smalley” on the latest consumer confidence reading from the Thomson-Reuters University of Michigan (Go Blue!).  This key index printed at 98.2 in January – blowing past expectations of a 94.1 reading.  That’s the highest level of consumer confidence recorded in more than a decade – and the biggest expectations “beat” in nearly two years.

So while consumers aren’t spending … they’re clearing buying the hype that the U.S. economy is on the mend.

The last time U.S. consumers were in such a good mood?  February 2004 …

“Gains in employment and incomes as well as declines in gas prices were cited by record numbers of consumers,” the index’s authors noted.  “More consumers spontaneously cited increases in their household incomes in early January than anytime in the past decade, and more households reported unprompted references to favorable employment prospects as well as lower prices than at any other time in the more than the half-century history of the surveys.”

Well, well …

As we’ve noted previously, consumer sentiment is important 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 …

Unfortunately last month’s favorable reading on this very index didn’t have a corresponding impact on retail sales … although we’ll continue to keep our fingers crossed that this month will be different.

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