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Consumer Confidence Falls In December

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On: Thu, Dec 30, 2010 at 11:19AM | By: Sherry Christiansen

Consumer Confidence Falls In December

On any given day, somewhere in America, there are a bunch of bean counters in a cubicle pouring over data from all different sources. When they hit enter on their Excel spreadsheets, they come up with a whole new batch of numbers which they can’t wait to share with everyone else.

Their proclamations about things, such as consumer confidence, retail sales, and home values, have a ripple effect through our economy. A bad report from this bunch could send stock prices tumbling. When that happens, investors tighten their belts and spend less. Spending less means less demand for products which means less need for making stuff. With no stuff to make, folks lose their jobs. All of that from a couple of number forecasts. Of course, it works the other way as well. A fact US automakers are all too aware of.

Today, the number everyone is talking about is the confidence among U.S. consumers. The Conference Board’s confidence index took a tumble to 52.5 which was lower than most of the “glass half empty” economic forecasters had predicted. What does that mean? It depends on who you ask.

Most of the survey takers can point to the depressive unemployment numbers as a reason why most folks feel skittish when it comes to their confidence level. How does that translate into action? Completely the opposite of what the survey says.

Retailers are popping the champagne corks because this past holiday sales season showed a jump of 5.5%, which gets the award for best holiday sales performance since 2005. This is built upon a 4.1% gain a year earlier. But, wait, there’s more. November car sales leaped to a 12.26 million unit pace. That’s the highest sales since the August 2009 cash-for-clunkers rush.

“We have a high degree of confidence that 2011 is going to be a stronger sales year,” says Ford Motor Company sales analyst George Pipas. “We’re a whole lot better off than we were a year ago.”

This confidence number is based on a survey of 61 economists. This gang thought that consumer confidence would actually rise to 56.3. Could they be wrong?

“We should watch what consumers do and not what they say,” said Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut. “If you looked at the confidence data you wouldn’t have looked for the pace of spending to accelerate as much as it has. Consumers are still very cautious and very nervous about where the labor market is headed.” And yet, they’re still spending. Safe bet is on the spending!


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