Need To Know News

July Consumer Confidence came in better than expected at 51.9 versus an upwardly revised 51.0 June reading (previous 50.4).

The Present Situation Index fell 0.1 to 65.3 with those claiming business conditions were “bad” rose 0.9% to 32.8%, swamping the 13.1% claiming business conditions were good.

Labor market conditions were deemed “bad” by 30.3% of respondents, up from 29.7% in June while those seeing jobs as “plentiful” fell from 14.1% to 13.5%.

The Expectations Index increased to 43 from 41.4 in June but consumers expecting business conditions to get worse in the next 6 months fell from 33.5% to 32.4%.

Inflation Expectations fell in July to 7.6 from 7.7 in June on a non-seasonally adjusted basis.

A Conference Board spokesperson said, “Consumers’ assessment of current conditions was little changed…in business or labor market conditions.” But she did add that…”while consumers remain extremely grim about short-term prospects, the modest improvement in expectations, often a harbinger of times to come, bears careful watching over the next few months.”

The Conference Board’s July Consumer Confidence Index is expected to fall to 50 from 50.4 in June, which was the lowest reading since March ’92 and the 5th lowest reading in the history of the index.

The Current Conditions Index fell to 64.5 in June from 74.2 in May. The Expectations Index fell to a new historical low in June at 41 from 47.3 prior.

The sharp correction in energy prices at the end of the month is likely to yield some improvement in consumer attitudes, but the prevalence of downside growth risks including the near-collapse of Freddie and Fannie is likely to keep the US consumer on edge. The collapse and subsequent bank run at Indy Mac is also likely to have had a negative effect on consumer confidence over the period.

U of M Consumer Confidence improved to 61.2 in July from 56.4 in June, while the Current Conditions and Expectations Indices also gained ground over the period. The RBC CASH Index fell to a new record low of 14.6 in July from 22.5 in June. The IBD/TIPP Index was unchanged at 37.4 in July.

The Conference Board’s July Consumer Confidence Index is expected to fall to 50 from 50.4 in June, which was the lowest reading since March ’92 and the 5th lowest reading in the history of the index.

The Current Conditiona Index fell to 64.5 in June from 74.2 in May. The Expectations Index fell to a new historical low in June at 41 from 47.3 prior.

The sharp correction in energy prices at the end of the month is likely to yield some improvement in consumer attitudes, but the prevalence of downside growth risks including the near-collapse of Freddie and Fannie is likely to keep the US consumer on edge. The collapse and subsequent bank run at Indy Mac is also likely to have had a negative effect on consumer confidence over the period.

U of M Consumer Confidence improved to 61.2 in July from 56.4 in June, while the Current Conditions and Expectations Indices also gained ground over the period. The RBC CASH Index fell to a new record low of 14.6 in July from 22.5 in June. The IBD/TIPP Index was unchanged at 37.4 in July.

The Conference Board’s June Consumer Confidence Index fell off a cliff in June, dropping to 50.4 from a revised 58.1 in May (previously reported as 57.2).

The reading was the 5th lowest on record and much lower than the consensus estimate of 56. The last time the index was lower was Feb-92, when it read 47.3.

The June Present Situation Index fell to 64.5 from 74.2, while the Expectations Index fell to 41 — an all-time low — from 47.3 in May.

“Consumers’ assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear,” the Conference Board said. “Looking ahead, consumers’ economic outlook is so bleak that the Expectations Index has reached a new all-time low.”

Oddly enough, the Conference Board sees a “silver lining”, saying that Consumer Confidence may be nearing a bottom.

Consumers seeing business conditions as “bad” rose to 32.5% from 29.7% in May, while those saying jobs are hard to get rose to 30.5% from 28.3% last month.

Those expecting business conditions to worsen over the next 6 months rose to 33.9% from 32.9% in May. More than 35% expect the job market to deteriorate, from 32.3% last month.

This not good news for an already-skittish market and raises significant GDP growth concerns for the FOMC (consumer spending is about 70% of the economy).

June Consumer Confidence is expected to fall yet again with gasoline and food prices rising against a still-plunging housing market and a sharp uptick in unemployment. Consumer Confidence came in at 57.2 in May and is expected to fall to 56 in the June data, which would be the lowest level since a 55.8 reading in Jul-94.

The loss of home value, even for those with no intention of selling, is beginning to look like the reverse of the internet boom wealth effect: most families’ most valuable asset is losing that value at a pace not seen previously. That’s likely to have a negative effect on consumer spending in much the same way that the loss of the internet boom’s wealth brought down consumer spending.

Just as consumer spending expanded with blistering home price increases from 2002 until 2007, it likely will contract as those effects are reversed at a rapid pace (a nationwide Ofheo home price index shows Q1 2008 prices falling on an annual basis for the first time since 1992, when it began keeping records). Consumer spending may not look as if it is falling, because prices are higher, but other data (manufacturing, car sales, travel, etc.) are bound to show a slowdown.

Little needs to be said about food prices; the basis for most finished food and grains has been spiraling upward for months and Midwest flooding promises to exacerbate this situation. The Saudis’ promise to pump more oil has more than been reversed by the loss of supply from Nigeria.

The employment situation — both the Initial Jobless Claims and Nonfarm Payrolls — are currently skirting recessionary territory, a trend that started last summer in the Claims data. Nonfarm Payrolls peaked in Oct-05, but the downward trend started accelerating in Oct-07.

Expect Consumer Confidence to continue to fall until at least one of these markets/data sets starts to level out.

Markets are very calm today, staying within tight ranges ahead of tomorrow’s consumer-focused data:

* Consumer Confidence, in a downward spiral since last July, is expected to once again come in at its lowest level since the early 1990s

* The Case-Schiller Home Price Index is not expected to inspire an equity market rally either though if numbers are dire enough bond futures could firm up as the likelihood of a rate hike is dissipated for a moment or two

* Johnson Redbook Retail Sales has shown a bit of life of late, posting a 2.3% gain last week and a 2.1% gain the previous week. Last week’s May Retail Sales data showed improvement as well, gaining 1% m-o-m vs. an upwardly revised 0.4% gain the previous month. However, Retail Sales, as reported by Commerce, are influenced by a much broader set of purchases. May’s report showed an increase in Auto Sales, Building Materials, Gardening Equipment and of course, Gasoline. Gains in the broader retail report indicate consumers biting the bullet on energy prices and fixing up homes in response to the housing crisis. In short, there ain’t no joy in the retail sector, and good data from Johnson Redbook is unlikely to reverse the sentiment

Today is a good day for calm markets, but not a necessary one.

June Consumer Confidence is expected to fall yet again with gasoline and food prices rising against a still-plunging housing market and a sharp uptick in unemployment. Consumer Confidence came in at 57.2 in May and is expected to fall to 56 in the June data, which would be the lowest level since a 55.8 reading in Jul-94.

The loss of home value, even for those with no intention of selling, is beginning to look like the reverse of the internet boom wealth effect: most families’ most valuable asset is losing that value at a pace not seen previously. That’s likely to have a negative effect on consumer spending in much the same way that the loss of the internet boom’s wealth brought down consumer spending.

Just as consumer spending expanded with blistering home price increases from 2002 until 2007, it likely will contract as those effects are reversed at a rapid pace (a nationwide Ofheo home price index shows Q1 2008 prices falling on an annual basis for the first time since 1992, when it began keeping records). Consumer spending may not look as if it is falling, because prices are higher, but other data (manufacturing, car sales, travel, etc.) are bound to show a slowdown.

Little needs to be said about food prices; the basis for most finished food and grains has been spiraling upward for months and Midwest flooding promises to exacerbate this situation. The Saudis’ promise to pump more oil has more than been reversed by the loss of supply from Nigeria.

The employment situation — both the Initial Jobless Claims and Nonfarm Payrolls — are currently skirting recessionary territory, a trend that started last summer in the Claims data. Nonfarm Payrolls peaked in Oct-05, but the downward trend started accelerating in Oct-07.

Expect Consumer Confidence to continue to fall until at least one of these markets/data sets starts to level out.

The Conference Board’s Consumer Confidence Index plunged to 57.2 in May — the lowest level since Oct-92 — from an upwardly revised 62.8 in April (previously reported as 62.3).

The Present Situation Index fell to 74.4 from 81.9, while the Expectations Index dropped to 45.7 from 50 in April.

The Conference Board cited weakening business and job conditions, “coupled with growing pessimism about the short-term future.” Inflation expectations, driven by high gas prices, are at an all-time high and are likely to shoot higher in the coming months.

Survey respondents seeing “bad” business conditions rose to 30.6% from 26.5% in April, and those anticipating worsening conditions rose to 33.6% from 27.4% last month.

The Conference Board’s May Consumer Confidence index is expected at 60.1 after a reading of 62.3 in April and 65.9 in March.

The Present Situations Index fell to 80.7 in April from 90.6 in March, reflecting ongoing weakness that the Board said suggested feeble Q1 growth conditions may have worsened in Q2. Inflation expectations were at an all-time high, exceeding post-Hurricane Katrina readings, in the April report. While food prices reportedly eased somewhat in recent weeks, Crude’s 20% jump in May will do nothing to slow inflation expectations in this month’s survey.

In the April report, the number of survey respondents planning a vacation over the next 6 months fell to its lowest level in 30 years. Survey respondents expecting worsening business conditions over the next 6 months grew to 27% from 26% in March. Respondents anticipating fewer jobs in the months ahead rose to 32.8% from 29.3% the prior month.

The other major measure of consumer confidence — the Reuters/University of Michigan Consumer Sentiment Index — was 59.5 in May, the lowest level since 1980. That reading, as well as the inflationary data out this month, doesn’t bode well for Tuesday’s Conference Board index.

The Conference Board’s May Consumer Confidence index, released Tuesday at 10:00am EDT, is expected at 60.1 after a reading of 62.3 in April and 65.9 in March.

The Present Situations Index fell to 80.7 in April from 90.6 in March, reflecting ongoing weakness that the Board said suggested feeble Q1 growth conditions may have worsened in Q2. Inflation expectations were at an all-time high, exceeding post-Hurricane Katrina readings, in the April report. While food prices reportedly eased somewhat in recent weeks, Crude’s 20% jump in May will do nothing to slow inflation expectations in this month’s survey.

In the April report, the number of survey respondents planning a vacation over the next 6 months fell to its lowest level in 30 years. Survey respondents expecting worsening business conditions over the next 6 months grew to 27% from 26% in March. Respondents anticipating fewer jobs in the months ahead rose to 32.8% from 29.3% the prior month.

The other major measure of consumer confidence — the Reuters/University of Michigan Consumer Sentiment Index — was 59.5 in May, the lowest level since 1980. That reading, as well as the inflationary data out this month, doesn’t bode well for Tuesday’s Conference Board index.