Consumer Confidence for December 2009

Consumer Confidence for December 2009 increased to 52.9 which is a 2.3 point increase from last month.

Expectations or what does the future hold increased to 75.6 from 70.3 in November.

But present situation confidence metric for December 2009, is 18.8, a drop from 21.2 last month and is at a 26 year low, with 1983 being the bottom reading of 17.5.

consumer confidence

What is more interesting is people actually believe the jobs situation will be better in 2010.

The percentage of consumers expecting more jobs to become available in the months ahead increased to 16.2 percent from 15.8 percent, while those expecting fewer jobs decreased to 20.7 percent from 23.1 percent.

I don't know what this measures, maybe a spin-o-meter from the green shooters.

Job growth for the entire next decade is dire and so are the current forecasts for GDP in Q3/Q4 2010.

What this implies to me is if we do not have immediate and dramatic job growth and none but the most outliner forecasts are predicting that, people are going to crash and burn on expectations next year. What was that from Hoover's time? A chicken in every pot, prosperity is just around the corner?

Those claiming business conditions are "bad" increased to 46.6 percent from 44.5 percent, while those claiming conditions are "good" decreased to 7.0 percent from 8.1 percent.

Yet somehow, magically think everything will be ok in a few months.

Why? Historically, a value of 90 means the economy is perceived to be on solid footing.

Perhaps this below chart, from BeSpoke Investment Group might put the current values in historical context. Note the Consumer Confidence Range on the right hand side and notice the dips per recession.

historical consumer confidence

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Hope floats

The difference between people's perception of the future, and their condition now, has never been greater.

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The question is what happens when the future fails to live up to people's perceptions? What sort of backlash are we looking at when the future turns into the present?

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Hope floats on a trend line

"The question is what happens when the future fails to live up to people's perceptions? What sort of backlash are we looking at when the future turns into the present?"

This is one of the most interesting questions in the history of political economy.

According to the latest Census Department survey data (American Community Survey- 2006-2008) only 6 % of the American population is 75 years or older. Accordingly, 94% of the American population has never in their lifetime known anything but a positive economic future. There have been some up and downs but the growth and prosperity have been the most significant economic condition that they have known.

This is unprecedented in the history of the nation and probably world history. Thus, from a social psychological point of view it is perfectly logical that they will feel positive about the future. The past is a guide to the future and the past has always been a positive trend line.

This may be the subconscious factor in ‘green shoot’ analysis. They keep looking at the correlates of past recessions and extrapolating them into the current situation. What non-green shooters seem to be saying is that there has been a paradigm shift. Old variables are not relevant (e.g. auto industry, consumer credit) and new variables (e.g. China and India) are now in play. To my mind green shoot analysis is analogous to 1950ish economist who were making projections about the US economy based on 1920s and 30’s correlates.

In short, green shooters and the population as a whole are assuming that the past is a guide to the future. But, there is ample evidence as bloggers on this site have demonstrated, that we are moving into a ‘brave new world.’ While I fear that many people are going to suffer in the new world, for social scientist, it is a very exciting time to live. Seldom does social change of great magnitude occur in real time.
Just a thought

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