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Sunday, February 27, 2011

Consumer Sentiment Report Already Out of Date

Friday morning, Feb. 25, Reuters/University of Michigan reported its Consumer Sentiment Index jumped sharply in February. This follows a Tuesday morning, Feb. 22, Conference Board report that its Consumer Confidence Index hit its highest level in three years in February. Can consumer optimism really be at a three-year high given current economic conditions?

Once again, these monthly efforts to measure the consumers' confidence in the economy are out of date. In late January, Gallup reported that economic confidence had hit a three-year high -- essentially what is just being reported by the monthly Indexes this week.

Earlier this week Gallup reported that consumers had given up all their early 2011 gains in optimism as of mid-February. And since that point, Gallup measurement shows consumer confidence has continued to deteriorate.

The decline in confidence Gallup is recording on a daily basis seems to have far more face-validity given such economic headwinds as: gas prices at $3.29 a gallon compared with $2.69 a year ago -- and headed higher with the chaos in the Middle East; the battle in Washington, D.C., over cutting federal spending; increasing underemployment; and the confrontation over spending and unions that started in Wisconsin and is now spreading to other states across the country.  


Anonymous said...
March 2, 2011 at 6:47 AM  

Dear Dennis,

What is the practical advantage, for banks and retailers, of knowing weekly consumer confidence indicators as opposed to monthly ones?

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