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Another Gain in Consumer Confidence

June 30, 2015

by Doug Short

The latest Conference Board Consumer Confidence Index was released this morning based on data collected through June 18. The headline number of 101.4 was a significant increase from the May final reading of 94.6, a downward revision from May's 95.4. Today's number was above the Investing.com forecast of 97.3.

Here is an excerpt from the Conference Board press release.

“Consumer confidence improved further in June, following a modest gain in May,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Over the past two months, consumers have grown more confident about the current state of business and employment conditions. In addition, they are now more optimistic about the near-term future, although sentiment regarding income prospects is little changed. Overall, consumers are in considerably better spirits and their renewed optimism could lead to a greater willingness to spend in the near-term.”

Putting the Latest Number in Context

The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

Consumer Confidence

On a percentile basis, the latest reading is at the 63% level of all the the monthly data points since June 1977. That's an increase from 51% previous month.

For an additional perspective on consumer attitudes, see the most recent Reuters/University of Michigan Consumer Sentiment Index. Here is the chart from that post.

Consumer Sentiment

And finally, let's take a look at the correlation between consumer confidence and small business sentiment, the latter by way of the National Federation of Independent Business (NFIB) Small Business Optimism Index. As the chart illustrates, the two have tracked one another fairly closely since the onset of the Financial Crisis.

NFIB Optimism and Consumer Confidence