Wednesday, May 27, 2009

Confidence is climbing

The Conference Board Consumer Confidence Index™, which had improved considerably in April, posted another large gain in May. The Index now stands at 54.9 (1985=100), up from 40.8 in April. After two months of significant improvements, the Consumer Confidence Index is now at its highest level in eight months (in Sept. 2008, it was at 61.4).

This is a big enough bump in consumer attitudes that we can be pretty sure it's not just a temporary blip. Although consumer confidence isn't the only thing to worry about, it was the collapse of consumer spending that pushed us over the edge (the housing crash itself did not send us into recession). Now we're likely to see an improvement-- albeit not a return to the exuberant spending of 2005 -- but a measured increase in spending.

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