On September 28, 2011, the Conference Board released their latest on Consumer Confidence. The trend over time is what is most telling. How volatile confidence is today is startling.
In February 2011, the Consumer Confidence Index reached 72 – a level not seen since First Quarter 2008. In Southern California, Builders & Developers started the year with feelings of cautious optimism in terms of neighborhood openings, planning, and land acquisition / land sales. Then, we started to lose ground quickly .
To say that “in August Confidence fell off a cliff” would unfortunately be appropriate.
Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook. The index is now at its lowest level in more than two years (April 2009, 40.8). A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade. Consumers’ assessment of current conditions, on the other hand, posted only a modest decline as employment conditions continue to suppress confidence.“ – Lynn Franco, Director of The Conference Board Consumer Research Center
Today, the Index is momentarily in a plateau and almost 7% lower than this time last year ( 37% lower than just 7 months ago!)
10 years of consumer confidence
The graph below provides a perspective using the U.S. Consumer Confidence Index over the past tumultuous decade.
Some of the major events of the era are noted to illustrate their effects on how people feel. For example, when the US experiences a new war, natural disaster, or other severe crisis, the index gauges the reaction and eventual recovery. What it doesn’t show is how this process changes people.
Key Take-away: Today, the larger picture shows consumer confidence is incredibly weak and volatile. (click the graphic to enlarge)
We appear to remain in a recession mind-set … wanting to believe we are in recovery only to be disappointed time & again. Stay tuned.
Worth Visiting: The Conference Board