Consumer confidence and the stock market took markedly different paths Tuesday. The Consumer Confidence index exceeded expectations as it rose to new levels. The stock market, on the other hand, dived below 10,000 Thursday afternoon as investors cowered in fear of the European debt crisis and escalating hostilities between North and South Korea.
The Consumer Confidence Index report
The Consumer Confidence Index report from the Conference Board which is actually a research group based in New York, said its Consumer Confidence Index rose to 63.3, up from a revised 57.7 reading in April. Economists surveyed by Thomson Reuters had expected 59. The Associated Press reports that the Conference Board Consumer Confidence Index survey — based on a random survey of consumers from 5,000 households between May 1 and May 18 — includes volatile days in the stock market like the May 6 Flash Crash and European debt crisis, but it was completed before the Korean crisis and a 376-point dive on May 20, the stock market’s worst one-day drop in more than a year.
Consumer Confidence ignored by stock market
More people are eligible for no fax payday loans for the first time in more than five years. The consumer confidence index is actually based on a sample of 5,000 US households. Tuesday’s report was the third consecutive increase and the highest level since March 2008. MarketWatch reports that the percentage of people who thought that there would be more jobs in the next six months outnumbered the percentage who thought there would be fewer jobs. In the meantime, when the latest report on the Consumer Confidence Index was released, the Dow Jones Industrial average had fallen more than 12 percent from its recent high of 11,205, reached April 26.
Consumer Confidence Index and the data
Since the record low of 25.3 in February 2009, the consumer confidence index has been rebounding. A reading above 90 indicates the economy is stable; above 100 signals strong growth. Consumer confidence index data is so important to economists because consumer spending accounts for about 70 percent of U.S. economic activity. CNNMoney.com reports that the expectation index, which measures consumer outlook over the next few months, rose to 85.3, the highest level since August 2007, when it came in at 89.2. Last month, employers added the most jobs since March 2006, and economists expect payrolls to increase by at least 500,000 jobs this month, which would be the most since September 1997.
The disconnect with the stock market consumer confidence
The stock market and consumer confidence index are on totally different planets. MarketWatch said that with banks withholding credit and U.S. consumers not spending, it was the $ 800 billion government stimulus package that jump-started a return to growth in gross domestic production, jobs and more recently consumer confidence. After seeing stocks plunge more than 50 percent twice in the past ten years, investors on the stock market are looking for other ways to make easy money.
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Associated Press reports
http://www.google.com/hostednews/ap/article/ALeqM5jsIlLP-jUnVIwDKXJfeEyTrbBlmQD9FTUM100
MarketWatch reports
http://www.marketwatch.com/story/consumers-getting-more-hopeful-about-jobs-2010-05-25
CNNMoney.com reports
http://money.cnn.com/2010/05/25/news/economy/consumer_confidence/
