BofA Finds Surging Consumer Confidence Does Not Result In Higher Spending

Tyler Durden's picture

While markets are closed tomorrow for Good Friday, the Census Bureau will release both CPI and Retail Sales data at their regularly scheduled times. And since it will be impossible to trade these numbers as they are released, here is a courtesy advance look from Bank of America which as usual has released its internal debt and credit card data in advance of the government report. What it found is that while there has been a slight improvement to the surprisingly poor data from recent months, it is nowhere near what one would expect based on near record consumer confidence surveys.

As BofA's Michelle Meyer writes, according to the BAC internal card data, consumer spending improved in March relative to the weak pace in February. The bank's estimate of retail sales ex-autos, derived from the aggregated credit and debit card data, increased at a 0.4% mom seasonally adjusted pace in March - the highest print in nearly a year - even as gasoline prices declined on a seasonally adjusted basis in March. While Meyer notes that this points to "healthy growth in core control retail sales released by the Census Bureau on Friday", she cautions that "the gain may not be quite as strong given that the BAC data had been trending below the Census and was therefore due for a bounce higher."

Furthermore, the monthly pattern has been particularly noisy of late – sales fell sharply in December (-0.9%), rebounded in January (1.6%) but slipped lower in February (-0.1%). There gave been a number of “special factors” which influenced retail sales, including the timing of the Christmas and New Year’s holidays and the delay in tax refunds which likely delayed spending from February to March. Therefore
it is prudent to smooth through the wiggles – on a three-month moving basis, retail sales ex-autos are up 0.6% mom, while retail sales ex-autos are up 4.5%

And while retail sales point to a modest improvement, Meyer writes that the potential rebound is nowhere near close to matching "the dramatic improvement in consumer confidence", which is also Bank of America's Chart of the month.

To put it into perspective, the Conference Board measure of confidence has reached the highest level since December 2000 while earlier today the University of Michigan hit highest since November of the same year. Putting 2000 in comparison, back then retail sales ex autos were running above 7% yoy and in 2007, about 4% yoy.  BofA's take:

While we think there are fundamental reasons for higher confidence – low unemployment rate, increasing wage growth, low borrowing costs and solid stock market performance – we believe that part of the increase in confidence reflects expectations for fiscal stimulus. In our view, there is a rocky road ahead for tax reform which we believe could trigger a partial reversal in confidence. Meanwhile, we expect actual spending to continue to grow at only a moderate pace.

It also means that, as cautioned here repeatedly, the soft data has now plateaued, and is rushing to converge with the "hard" data to the downside.

Some other observations:

don't expect a sharp rebound in northeast spending.

  • The Northeast was hit by a blizzard during the week of March 12th, dropping several feet of snow in parts of the region.
  • We can see the impact of the storm in our card data. We find that card spending in the Northeast exceeded the rest of the country in the days heading into the storm as households presumably stocked up with necessities in preparation.
  • This was offset by a meaningful drop in card activity during the storm. On balance, we estimate that the blizzard served as a very slight drag on overall spending in the month

Restaurant spending remains recessionary

  • Spending growth at restaurants has generally been on a downward trajectory, increasing only 3.2% yoy in March.
  • Part of this weakness reflects difficult year-over-year comparatives. As you can see from the month-over-month changes, spending at restaurants is still increasing on a sequential basis, but at a slower pace than last year.
  • There was also an unusual swing at the turn of the year where spending was down sharply in December but climbed higher in January. We suspect this may reflect the timing of Christmas Eve and New Year’s Eve which both fell on Saturdays, therefore distorting the typical weekly spending patterns.

Finally, 4 more charts showing that whether it tracks confidence or not, the US consumer has seen far better days.

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Ghost of PartysOver's picture

Consumer confidence all based on Trump draining the swamp, peace with Russia, bitch slapping China, bring jobs back.....  None of witch is happening so far.  Either Trump gets his shiat together or consumer confidence plumments.

BullyBearish's picture

does anyone REALLY believe any of these surveys?

jcaz's picture

But... but.....Jamie has spent all morning pumping the good times and fluffy clouds in the sky, so it must be so......

GUS100CORRINA's picture

Title: BofA Finds Surging Consumer Confidence Does Not Result In Higher Spending

My response: It's the economy stupid! Consumer confidence is a MADE UP NUMBER to create the desired narative. Figures LIE and LIARS can figure.



No. 879: March Employment and Unemployment, Help-Wanted Advertising, Money Supply M3

April 7th, 2017

• FOMC-Rattling ‘Substantially Adverse Economic Circumstances’ Loom

• March 2017 Real-World Employment Prospects Continued to Plunge at an Annual Pace of Decline Not Seen Since the Depths of the Economic Collapse

• Soft Payroll Jobs Gain of 98,000 in March Was Not Statistically Significant

• Declining Monthly Unemployment Rates Simply Were Not Comparable

• That Said, March Unemployment: U.3 Declined to 4.5% from 4.7%, U.6 Fell to 8.9% from 9.2% and ShadowStats-Alternate Fell to 22.5% from 22.7%

• Those Were the Lowest, Headline Unemployment Rates for U.3 since May 2007, for U.6 since December 2008 and for ShadowStats since April 2012

• Nominal Money Supply M3 Annual Growth Sank to a 57-Month Low in March, Real Growth Declined to a Level Not Seen Since Depths of the Economic Collapse


No. 878: February Trade Deficit, Construction Spending, Updated Consumer Liquidity

April 4th, 2017

• Sharp Narrowing in February 2017 Trade Deficit Reflected Plunging Imports of Consumer Goods, Such as Autos and Cell Phones

• Declining Consumer Demand and/or a One-Time Reporting Aberration?

• First-Quarter 2017 Real Merchandise-Trade Is on Track for Worst Deficit Since Third-Quarter 2007

• Despite a Nominal 0.8% Monthly Gain in February Construction Spending, Inflation-Adjusted Activity Remained in Stagnant Non-Recovery, Headed for First-Quarter 2017 Quarterly and Annual Contractions

• Consumers Face Continuing Income and Credit Stresses, Amidst Mixed Optimism


No. 877: Industrial Production Benchmark Revision

April 2nd, 2017

• Industrial Production Just Took a Hit with Its Benchmark Revisions, Given Higher-Quality, Weaker Historical Data from 2015

• Double-Dip Recession in Production Now Steeper than Previously Indicated

• Two or More Consecutive Quarters of Annual Decline in Production Are Unprecedented Outside of Formally-Recognized Recessions; There Were Five, Now There Are Seven Consecutive Quarters in Place

• Gold and Silver Mining Activity Revised Sharply Higher

• Negative Indications for Pending Benchmark Revisions to Retail Sales, Durable Goods Orders and the GDP

• Broad Outlook Continues for Non-Recovering Economic Activity

• Issues Foreshadow FOMC Problems, a Weaker Dollar and Stronger Gold

Bemused Observer's picture

Ha ha! The consumers are more confident because they have realized they don't HAVE to consume at the rates they used to, which makes their decreased income go much farther.


You weren't EXPECTING that, were you? Stuff THAT in your warehouse full of unsold surplus pipes and smoke it!


Yes, your statistics are correct. You just have no idea what they MEAN.

aeslong's picture

So, the so called "surge" is fake new

Seasmoke's picture

I'm confident these surveys are all bullshit.

buzzsaw99's picture

University of Michigan Consumer Confidence Survey = Fake News

imo they have probably been fudging it to help owebomber look better for years.

Sonny Brakes's picture

All consumer confidence really means in this economy is that a person will be able to pay their minimum monthly payment on their credit card.

g3h's picture

What a surprise.

GRDguy's picture

Consumers are just becoming more confident in their knowledge 

that a whole lotta folks are lyin' and stealin' from them,

that shouldn't be doing that.

It's simply called self-defense.

DarthVaderMentor's picture

Everybody but the politicians is broke, The Obama Healthcare has sucked the money out of the economy and into the hands of the lobbyists and big pharma.