Consumer Confidence Plunges

The market is getting smacked around this morning thanks to an awful report on consumer confidence.

The Conference Board, a New York-based research group, said its Consumer Confidence Index fell to 46.0 in February from 56.5 in January.
According to a Briefing.com consensus survey, economists expected the index to fall slightly to 55.0 from 55.9. The index, which is based on a survey of 5,000 U.S. households, is closely monitored because consumer spending drives two-thirds of the nation’s economic activity.
The overall index remains at historically low levels and is the lowest since April 2009. A reading of above 90 indicates a stable economy, while 100 or greater is an indication of strong growth.

The present situation index hit a 27 year low of 19.4. I can’t say exactly why but I’m very skeptical of this report. I realize I sound like a person who refuses to believe the data that counters his bias, but this report just doesn’t ring right. It’s too much of an outlier.
The market seems to agree with me. Stock prices are down but nothing dangerous. These consumer confidence reports are subject to revisions, and revisions of the revisions. I’ll need to see more data before I’m fully convinced that were headed back down the drain.

Posted by on February 23rd, 2010 at 12:03 pm


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