The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through April 12th. The 69.2 reading was slightly below the consensus estimate of 69.5 reported by Briefing.com and further below Briefing.com's more optimistic forecast of 71.0. This is a small decline from last month's 69.5, which is a downward revision from the Conference Board's previously reported 70.2.

Here is an excerpt from the Conference Board report.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumer Confidence was virtually unchanged in April, following a modest decline in March. As was the case last month, the slight dip was prompted by a moderation in consumers' short-term outlook, while their assessment of current conditions continued to improve. Overall, consumers are more upbeat about the state of the economy, but they remain cautiously optimistic."

Consumers' assessment of current conditions improved in April. Those claiming business conditions are "good" increased to 15.3 percent from 14.3 percent. However, those claiming business conditions are "bad" edged up to 33.5 percent from 33.2 percent. Consumers' appraisal of the job market remained mixed. Those stating jobs are "hard to get" declined to 37.5 percent from 40.7 percent, while those stating jobs are "plentiful" decreased to 8.4 percent from 9.0 percent.

Consumers were, once again, slightly less optimistic about the short-term outlook. Those expecting business conditions to improve over the next six months decreased to 18.8 percent from 19.3 percent, while those anticipating business conditions will worsen increased to 14.2 percent from 13.7 percent.

Consumers' outlook for the labor market was less upbeat. Those anticipating more jobs in the months ahead decreased to 16.9 percent from 17.4 percent, however, those anticipating fewer jobs decreased to 18.0 percent from 18.5 percent. The proportion of consumers expecting an increase in their incomes declined to 14.0 percent from 15.5 percent.   [press release]

The Recessionary Mindset

Let's take a step back and put Lynn Franco's interpretation in a larger perspective. The table here shows the average consumer confidence levels for each of the five recessions during the history of this monthly data series, which dates from June 1977. The latest number is well above the bottom of the unprecedented trough in 2008, but it is virtually identical to the 69.4 average confidence level of recessionary months a full 35 months after the end of the Great Recession (based on the official call of the National Bureau of Economic Research).

The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end I have highlighted recessions and included GDP. The linear 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 clearly resembles the regression trend for real GDP shown below, and it is probably a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference. Today's reading of 69.5 is well below the 80.9 of the current regression level (14.4% below, to be precise).

 

 

It is interesting that the consumer confidence pattern of the past 34 months following the NBER declared end to the recession is similar to the 36-month pattern following the 1990-1991 recession, although the current pattern has so far been at a lower confidence level. At an even higher level, there was also a two year period following the 2001 recession where confidence lagged. A common factor in all three cases is a "jobless recovery". To great extent Consumer Confidence is a proxy for unemployment problems. The rise in confidence in recent months has been concurrent with an improvement in the monthly unemployment numbers.

On a percentile basis, the latest reading is at the 23rd percentile of all the monthly readings since the start of the monthly data series in June 1977 and at the 16.9 percentile of non-recessionary months.

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

 

 

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 been closely correlated since the onset of the Financial Crisis.

 

 

The NFIB index has been less volatile than the Conference Board Consumer Confidence Index, but it has likewise only partially recovered since the official end to the recession in June 2009.