Consumer Confidence

The preliminary June U of Michigan confidence # was 69, .5 point below estimates but up a touch from May and its the highest since Sept. Interestingly, current economic conditions (measuring how people feel today as opposed to what they think about the future) saw a 6.8 point jump, rising to 74.5 and is just shy of the 75 reading in Sept ’08. The outlook, which rose in May to the highest since Oct ’07, fell 4 points. Coincident with the overall improvement however was the jump in one year inflation expectations to 3.1% from 2.8% and is now at the highest since Oct ’08. In the free spending days of the ’90s and ’00s, higher confidence typically correlated with higher spending. In today’s growing thrifty culture maybe we’ll see a rise in confidence correlating with higher savings and less debt as we should feel more confident with money in the bank and lower credit card balances and rely less on the value of our homes and stock portfolios. That’s a bigger picture view, but shorter term the continued rally in stocks and the stabilization in the banking sector after large capital raises have led to the modest improvement in overall confidence.


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