Consumer Confidence Creeps Up

US consumer confidence rose in November following a substantial drop over the last few months. Four different confidence indexes - from TNS (for the Conference Board), Ipsos (for the Royal Bank of Canada), BIGResearch, and the University of Michigan - all report similar patterns of recovery.

Conference Board Consumer Confidence Index

The main index, released today, now stands at 98.9 - up from 85.2 in October, and higher than November 2004's 90.5. The present situation index also rose - to 114.0 from 107.8 - and the expectations index surged to 88.8 from 70.1 last month.

Lynn Franco, Director of The Conference Board Consumer Research Center, explains the results: 'A decline of more than 40 cents in gasoline prices this month and the improving job outlook have combined to help restore consumers' confidence. While the Index remains below its pre-Katrina levels, the shock of the hurricanes and subsequent leap in gas prices has begun wearing off just in time for the holiday season.'

The monthly survey is based on a representative sample of 5,000 US households conducted by TNS NFO. 100 represents the level of consumer confidence in 1985. More details are at www.conference-board.org/economics/consumerConfidence.cfm

RBC Consumer Attitudes and Spending by Household (CASH )Index
The main consumer confidence index stands at 81.0 for November, compared to 66.8 in October - but still below last year's November results of 89.8.

Improved confidence also lifted the expectations index to 44.5 for November, a substantial increase since September's 13.5, but not as high as last November (69).

Respondents also expressed slightly greater confidence in their personal financial situation, with a quarter rating their situation as strong, compared with 23% in October. The RBC jobs index also remained strong at 119.8 for November, up from 111 a year ago.

Vince Boberski, Chief Economist at RBC, says: 'American consumers have had to contend with some unsettling developments in recent months, certainly enough to dampen their expectations about future economic conditions; but the rebound in those expectations speaks to the underlying strength of the economy.'

The RBC CASH Index is based on telephone interviews conducted by Ipsos Public Affairs with a representative sample of 1,000 individuals across the US. This month's interviews took place between 7th and 9th November.

More details are at www.rbc.com/newsroom/rbc-cash-index.html

BIGresearch Consumer Confidence Index
The BIGresearch index also sees confidence rise for the second consecutive month. The main index stands at 39.6%, a two-point gain from October, although six points lower than this time last year (45.3%).

Fewer consumers say they have become more practical in their spending in the last six months: the practicality measure now stands at 45.7%, down more than four points from October (50.1%), but up from last year (41.6%).

BIGresearch's Consumer Intentions and Actions (CIA) survey monitors more than 8,000 consumers each month. The percentage represents those consumers who are confident or very confident about the chances of a strong economy. The November figures are based on interviews between 2nd and 9th November.

More details are at www.bigresearch.com

University of Michigan Index of Consumer Sentiment
The University of Michigan's November index, released last week, also saw an improvement, ending the three-month plunge between July and October.

The Index of Consumer Sentiment rose to 81.6, up from 74.2 in October, but still below the 96.5 recorded in July and the 92.8 in November 2004.

The Index of Consumer Expectations was 69.6 in the November 2005 survey, up from 63.2 in October, but well below July's 85.5 and November 2004's 85.2.

Richard Curtin, the Director of the University of Michigan's Surveys of Consumers agrees that this month's rise was helped by a decline in gas prices. However, although gas prices have fallen to their lowest level since June, the November gain reversed only a third of the losses recorded in the last three months. According to Curtin: 'The economic circumstances that consumers once found acceptable are now viewed with trepidation'.

Nearly all the positive impact on personal finances from declining gas prices was reported by households with incomes above $50,000. Those households with lower incomes still reported widespread financial distress, and anticipated little improvement in their finances during the year ahead.

The index is based on a monthly, nationally representative survey of 500 US households. Each month, a cross-section of households is chosen to be re-interviewed six months later. This makes for a rotating panel, with around 40% of respondents in each sample being interviewed for the second time.

More details are at www.sca.isr.umich.edu/main.php.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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