Consumer confidence reaches six month high

May 27, 2009 – 9:40 am – No Comment

The consumer confidence level has increased at a fairly steady rate for a couple of months, but the numbers that came out today were much higher than anticipated as far as the increase goes. The Conference Board’s Consumer Confidence Index has a 14.1 point surge; increasing to 54.9 for the month of April. Economists were expecting a Confidence Index of 42.3. This comes just months after February’s lowest level ever of 25.3.

The consumer confidence interval is determined by a mail survey of a sample of 5,000 households in the United States from May 1st to May 19th.

The confidence interval increase means that many people are feeling more optimistic about the future of the economy including unemployment numbers. However, it is likely that the unemployment rate will hit just above 9% in the next month or two. It is nice to see that people think that things are getting better even when there are is a lot of grim news coming from economic indicators.

Today when the consumer confidence index rose, so did stocks. The Dow Industrial Average rose over 200 points, or 2.4 percent today after the news about consumer confidence came out.

The consumer confidence index began falling in October, when it fell to 38.8. At the time, it was the lowest number that had ever been seen since the Conference Board started tracking the confidence index.

This, by no means, means that people will begin throwing their money away on expensive clothing or other things that have been deemed “unnecessary” in the past few months. What was once just something that may have been a splurge is now seen as frivolous and is possibly frowned upon in some social circles.

Another reason that people aren’t spending their money on those things is that there aren’t as many jobs going around anymore and that the actual wealth going around is much less than it was even a year ago. With people having less and less money, I am actually pretty surprised that the consumer confidence index has risen. Perhaps people are getting so tired of the current economy that they are being overly optimistic on the surveys that are being sent out.

I mean, even this news is coming out in a positive light following the news last week that housing prices has fallen in the sharpest decline in the first quarter of the year.

In my optimistic point of view, perhaps this is the beginning of some sort of economic increase. If you follow the stock market, commodities market, and other indicators, then perhaps things are starting to pick up.