A Bounce in Consumer Confidence

Rising foreclosures, unemployment near 10 percent, a $1.5 trillion budget deficit, and Americans are actually feeling better about things? Apparently so. According to The Conference Board's latest Consumer Confidence Index, American consumers are more bullish on the future of the U.S. economy then they've been since December 2007, which is the exact month this whole Great Recession thing got started. The Confidence Index, which had retreated in July, bounced back in August and now stands at 54.1, up from 47.4 in July. When it comes to the present situation, consumers are less excited, 24.9 compared to 23.3 in July. Looking forward though, our expectations are considerably higher, up ten points from 63.4 in July to 73.5.

The survey is based on a sample of only 5,000 U.S. households, many of which surely got some cash for their clunker in the last month. Survey officials say the uptick is due to "consumers' assessment of the job market." Funny how losing 3.8 million jobs between November 2008 and April of this year, makes losing 1.2 million from May to July look like progress. The good consumer news, coupled with President Obama's reappointment of Fed Chairman Ben Bernanke, goosed the stock market this morning, with the Dow Jones up 96 points at 10:30 am.

Let's not get too carried away though. Consumer confidence is still depressed, though it has roughly doubled since bottoming at 25 in February, the lowest it's ever been since The Conference Board started tracking it in 1967. Until last fall, consumer confidence hadn't been below 50 since February 1991, the same month that American ground troops crossed into Iraq from Saudi Arabia, and U.S. unemployment rate was 6.6 percent. And of course we're still light years away from a record high of 142 in September 2000, the tail-end of the dot-com boom.