Tuesday, April 28, 2009

Consumer confidence is bouncing

Here are two different measures of consumer confidence. The first chart has data released today for April (from the Conference Board), while the other is from the U. of Michigan and was released a few days ago. Both show confidence bouncing in recent months from very low levels. This is not a lot to hang a recovery hat on, however. Confidence is typically a lagging indicator and tends to respond to other things going on, rather than being a driver of other things. This time it might be more important since it was a lack of confidence in banks and counterparties that helped precipitate the recent crisis. In any event, very low levels of confidence are typically characteristic of low points in economic activity, so these charts are telling us that we have a sufficient condition in place for a recovery, if not a necessary one.

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