With gold and silver pulling back and bonds and stocks trading higher, here is a stunning look at what is happening with consumers.
Stunning Look At What Is Happening With Consumers
May 28 (King World News) – Peter Boockvar: The Conference Board’s Consumer Confidence index for May rose 4.9 pts m/o/m to 134.1 and that was 4.1 pts better than expected. It follows a 5 pt rise in April and is at the best level since October (see chart below).
Consumer Confidence Hits Highest Level Since October
For perspective, the 12 month average is now 130.5. In contrast to the rise in inflation expectations in the UoM confidence figure, one year inflation expectations in this survey fell to 4.4% from 4.6%…
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Both the Present Situation and Expectations components were up m/o/m. Again, the strength of the labor market was the main catalyst for the boost in confidence. Those that said jobs were Plentiful rose .7 pts to the best level since January 2001. Those that said jobs were Hard to Get fell 2.4 pts to the least since September 2000. Employment expectations are at the highest level since November and those expecting an Increase in Income saw the best print since November too. Offsetting somewhat the higher income expectations was also a rise in those expecting a Decrease in Income unfortunately so we can combine the two and call it mixed.
As for how this heightened level of confidence translated into spending intentions, all three main categories saw m/o/m gains. Those that want to buy an automobile rose 1.1 pts but after dropping by .9 pts in April. Those that want to buy a home was up by 1.3 pts but fell by the same amount last month. Those that want to buy a major household appliance rose to the highest level since November.
The Conference Board summed up the report by saying:
“Consumers expect the economy to continue growing at a solid pace in the short term, and despite weak retail sales in April, these high levels of confidence suggest no significant pullback in consumer spending in the months ahead.”
Very Different Confidence Levels Based On Age
This all said, I do want to highlight the very sharp differentials in the age groups with respect to confidence and this likely explains why retail sales, notwithstanding these comments, have been very mediocre year to date. Consumer confidence for those under the age of 35 plunged by 25 pts to the lowest level since September 2016 (see chart below).
Consumer Confidence Collapsing For Those Under 35 Years Old
Too much student debt? High cost of housing, whether buying or renting? At least a 25 yr high in credit card interest rates? Lack of savings? Something else? All of the above?
Confidence for those aged 35-54 rose 4.7 pts but spiked by 15.1 pts for those aged 55 or older (see chart below).
55 & Older Consumer Confidence Spiking (Near All-Time High)
For markets, this number never moves the needle. The 10 yr yield is still below 2.30%.
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