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Consumer Confidence Jumps Most In Eight Years, More Than 4 Standard Deviations
The somewhat incredible rise in consumer confidence this morning is the largest absolute jump since April 2003 from prior revised 40.9 to 56. On a percentage basis, only the April 2009 reversion was higher as this represents a 4 standard deviation elevation from its long-term mean.Of course, its all about expectations, as the sub-index jumped from 50 to 67.8.
Expectations jumped the greatest of the sub indices but remains only back to July 2011 levels.
Charts: Bloomberg
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Ah, here we go: "This turkey was injected with a Hopium solution to add moisture."
It's the $1.28 towels. Amazing what $1.28 towels at Walmart can do for confidence.
... peace, prosperity, education and towels of trust.
"Who are these people?" Sienfeld....
Butch Cassidy: I couldn't do that. Could you do that? Why can they do it? Who are those guys?
Is this supposed to be believable? Consumer confidence jumps despite surging Food Stamp participation and anemic job creation and broad lowering of corporate EPS projections and the ongoing meltdown in the EU?
Maybe what this really indicates is that consumers were confident they could buy a cheap TV from Target...
100% BS.
AMR common stock today:
http://finance.yahoo.com/q?s=AMR
Ouch!
Sorry Tyler, I understand that you are bearish but please - current conditions also jumped, from 27.1 to 38.3. It's not "all about expectations".
I would sure like to see the macroeconomic data that points to an actual surge in "current conditions". I also don't care about Black Friday or Cyber Monday. Those are anomalies and are not sustainable.
If the US government had been required to produce a balanced budget in FY 2011, where you you suppose the national GDP would have been in FY 2011. Same thing goes for FY 2012. Heaven forbid we be required to live on a balanced budget...
100% FUBAR.
It's just a sentiment indicator. People say they feel a bit better. It has nothing to do with budget.
Just an opinion: "conditions are better". As good as yours: "it's an anomaly".
"It's just a sentiment indicator. People say they feel a bit better." - ded_moroz
I realize that. That is why I want to see some ACTUAL macroeconomic data that supports improved consumer sentiment.
"It has nothing to do with budget." - ded_moroz
I realize that. However, if the ~$1.3 Trillion in deficit spending in FY 2011 had been stripped out, GDP "growth" in FY 2011 vs. FY 2010 would have been largely negative. How positive do you suppose consumer sentiment would be then?
"it's an anomaly".
Let us see how strong retail sales are when the whole of November and December are tallied. My suspicion is they will not, as a whole, be substantially higher than the year-ago period.
Consumer confidence number is 40% higher than last month. Huh. Really. Is that what Rick Santelli just said? Yes, that is what he said. No wonder OWS is still going strong.
Total bullshit and propoganda to try and keep the fish biting. Yup, to all you suckers, keep spending because the recovery is here. lol!!!
I guess that means most Americans are "sucker" fish! That's makes a whole lot more sense than this market! +1
Nothing makes sense these days! I am NOT confident!
It's a lagging indicator at best. Confidence in consumers is highest just days before all ships come crashing down. Consumers are the last to get the memo.
So much hopium was peddled by government and their propaganda outlets, it is surprising that consumers are not a whole lot more "confident" up until the LAST minute.
Don't forget to bring a towel.
LOL- do people still pay attention to this number? As I recall, it's done on the basis of a survey of 30 (yes, thirty) households.........
A friend of mine use to say about dieting and exercise: I never use a scale, because the mirror tells me everything I need to know. Same holds true here...the numbers ("scale") are lying. Just look around and you will see the state of things pretty clearly ("mirror").
You can twist perception...reality won't budge. (N. Peart)
Benson’s Economic & Market Trends:
No Bull Prize in Economics | November 8, 2011
The crux of any economic theory starts off with the magic words “first assume that” and then using dazzling logic follows an irrefutable happy conclusion. The real key to using economic theory and logic is in the assumptions. Assume the correct things about the world, and you have a chance of getting the outlook right. Assume the wrong things, and any model will generate totally unreliable garbage.
My experience in the business and investment world over the last thirty five years has taught me a few things about assumptions, so if you are interested in surviving the slings and arrows of outrageous fortune, putting some good business policies in place is crucial. Always assume nothing, verify everything, assume the worst could happen and, if things can go wrong, they do and will. Even my motto around the house “if it isn’t broke, I can fix that” is based on experience. I have learned wisdom can be as simple as substituting facts for assumptions.
As a baby boomer facing retirement down the road, I can’t help but wonder whether there will be anything left in the Social Security Fund and my personal investments by the time I need them. I rely on assumptions when making my own investment decisions and if they are not right, I could outlive my money and starve. Now, many corporations and government pensions, insurance company annuities, and retirement advisors rely on investment, economic, and corporate projections that are all based on critical assumptions. The assumptions used by big business and big government are all generated and reinforced by legions of economists, accountants, actuaries and pundits, who, by the way, are all bought and paid for by the government and powerful corporations. The experts are paid very, very well. Why? Because, it seems, the experts are paid twice. The first time is to figure out what an assumption needs to be to get the result the corporation or government wants to hear. The second time is to justify the assumption by creating up a bunch of bull to hand out to the public. The bull in turn is fed to the public by reporters and TV hosts who are also paid very, very well not to question the experts or their assumptions.
It’s these bull assumptions I keep hearing that hit me over the head and between the eyes like a two by four. The biggest bull is that both corporations and state and local governments assume their investment portfolios will grow an average of 8.5 percent a year. This assumption continues today, despite the fact that 10 year treasury securities have on average yielded less than three percent over the last three years, and currently yield two percent. So, an 8.5 percent investment assumption on a safe asset is laughable and only one of many assumptions about the present and future that might as well be from Mars. Another such assumption is that banks can hold assets on their balance sheet at cost and not what they are worth today, or that real economic growth will be three to four percent a year for the next 10 years. One of the craziest assumptions, however, is that inflation is contained and the money available for retirement will cover the future cost of living. These are just a few on the list of unrealistic and hopeful assumptions that stretches on and on. If you’re a Baby Boomer like me, and fearful of the future, instead of looking at happy business and government assumptions, perhaps we should all be looking at hard cold facts and make decisions based on them, not fiction or hope.
For instance, even if the reinvestment rate of investment in pension and retirement accounts was 8.5 percent, pensions and retirement accounts are still under-funded by trillions of dollars. Governments don’t want to tap taxpayers, and corporations don’t want to contribute to those funds from earnings. Why? Because it’s a mathematical fact that when you start with underfunded pensions, and have core government interest rates as low as three percent, virtually all of the defined pension plans (regardless of whether companies and governments will be asked to actually step up to the plate and contribute) are close to being bankrupt.
It’s also a fact that the Federal Reserve has guaranteed to keep short-term interest rates near zero well into 2013 and beyond. Indeed, the Federal Reserve is running an overt and knowing policy of keeping the rate of inflation well above the rate of interest. For a saver or senior depending on a pension, this is not reassuring. In other words, basing a retirement model on 8.5 percent investment returns is about as realistic as assuming that pigs can fly. The government also wants to change the nature and composition of the Consumer Price Index to keep reported inflation down. Under-reporting inflation will give Social Security and Medicare less money and save the US Treasury hundreds of billions of dollars. But retirees are already short-changed by the government price indexes because most of what retirees pay for is rent, food, fuel, and other utilities that go up rapidly in price. Meanwhile, the Consumer Price Index includes a lot of high-tech gadgets and games which show price decreases because computers run faster and store more data. Much of what is consumed is videos, games, and social networking. As I get older, my problem is that I want to eat and drive somewhere, and not play computer games or socialize with silly twits on Facebook. Over time, Social Security will be forced to change its name to “Social Insecurity” because cuts in retirement benefits are coming, and the value of the dollars paid to retirees will drop because of inflation.
At my age, I’ve given up dreaming of winning a Nobel Prize based on dazzling logic applied to delightful assumptions. Instead, I have settled for simply trying to understand the interplay of political reality smashing against the rock of hard economics caused by older workers retiring faster than younger workers are entering the labor force. In short, I just want to sniff out the bull that is being handed out as laughable assumptions and twisted by economic logic into total crap. I’m only looking for a “No Bull” prize in economics, in a world where in print and on TV the bull never stops.
http://www.sfgroup.org/articles.htm
creative accounting has been around a long time. You start with the end number you want, and work your way back.
I think it maybe appears as "confidence", but would be better described as "stopped caring" as in I don't give a shit; let me know when the ride is over. If that is bullish then... whatever.
agree. Its more like we realize the plane is going to crash, so right now we are at the " smoke em if you gottem " moment.
I feel the same way as many of you about the consumer confidence number. It defies reason that people would feel so good given the state of the real estate market, unemployment, scott pelley showing homeless kids living out of a van etc. It is America though, so they asked people who get their daily dose of bread and circuses. People will not recognize reality until they can no longer watch Chazz Bono dance with the stars while they shove another Burrito Loco down their throats. At the point that ends, they will flood into the streets and look for "rich" people to kill.
When ever I bring up the US/Euro/Chinese debt situation to friends or family I am either laughed at, told I am bumming everybody out so stfu or looked at like I am crazy. I kind of feel like Churchill when no one wanted to hear the bad news that Hitler was not a reasonable man. But like Gandhi said about truth, it does not matter if you are the only one that knows it, all those other people who can't accept it are wrong.
Good post.
"But like Gandhi said about truth, it does not matter if you are the only one that knows it, all those other people who can't accept it are wrong."
It takes guts to tell the truth when nobody else wants to listen.
It's all just Ministry of Truth goodthink.
The Hitler references tend to negate other logical statements. In this case, it identifies that truth has many avenues, with Churchill hardly fitting the model of a reasonable, truthful or peaceful man. It was Churchill sitting with FDR at Yalta alongside the man - Marshall Stalin - the two of them were to deliver a major chunk of Eastern Europe into despotic slavery.
Reasonable?
Stalin had a strong hand at the table. FDR was done, Churchill was aware of the problem, but figured he was saving the important part of Europe, since he couldn't save it all. I am sure he regretted the necessity of the deal with the devil.
A. Stalin did not have a strong hand.
B. FDR might have been ill but the US military was the strongest force on the face of the earth.
C. If there were regrets from Churchill, I missed them, just as I apparently overlooked the apologies for the wholesale murder and destruction carried out by the Royal Air Force on Dresden.
Sorry Ned, I can't see their innocence in this deal with the Devil.
Please explain why Stalin did not have a strong hand? I am genuinely interested.
The Allies were holding the primary trump cards at Yalta; an atomic weapon that would end the war with Japan and an incredible ground and air superiority in Germany that could push to Berlin and beyond. FDR’s proposals were based on a hope that a United Nations would keep the Soviets in check and he accepted promises from Uncle Joe far beyond what a reasonable negotiator would have expected to be fulfilled. As a result, the Polish boundary was moved westward by the Communists, the remaining Polish government contained two-thirds Communists and the people of Eastern Europe were relegated to slavery and death behind the Iron Curtain.
The point is, it was a war and we had the forces to win the war on our own terms. Instead, we decided to negotiate those strengths.
And for what? That Russia would enter the war against Japan, a promise so favored by FDR but that wasn’t fulfilled until two days after the atom bomb was dropped on Hiroshima? And for Russia’s promises she would be a peaceful partner in the unification of Germany and elections (never held)?
The bottom line is that the U.S. was powerful and FDR was weak and a mere pawn in the hands of his “Uncle Joe.” As Don Keko wrote in American History Examiner, ”American President Franklin Roosevelt hoped to convince Soviet leader Josef Stalin to attack Japan in order to shorten the Pacific war. As a result, he willingly surrendered the Eastern European sovereignty to the Communists in exchange for Soviet military assistance against the Japanese empire.”
It wa an “assistance” FDR never needed and came at a price that cannot be repaid to the people of Eastern Europe for the contrived belief that Stalin held the cards because of the terrority he occupied and threat of a possible war with Russia while her people were starving and the war casualties of the Red Army wre massive.
The right approach is to ignore all "sentiment based" indexes altogether. It is noisy pseudo-data.
As an aside, my observation is that the Xmas Time propaganda machines were turned on at full blast just before Thanksgiving and I expect them to run 24/7 until year end if for no other reason than to put the paddles to the corpse and watch it twitch and squeeze out a few more moldy turds for the amusement of the TPTB. The Bloomberg announcer made it sound like Italy today paying over 7% for a short-subscription 10 year was a confidence building event. There is no cash to fund the ESFS.
Reality will return shortly, but until then, enjoy the show.
Consumer ConFRAUDence
Consumer confidence is exactly what is says: the confidence of the consumer. This is not the consumer sophistication index, the consumer rationality index, or the consumer foresight index.
Assuming that the consumer is intelligent, rational, or - most importantly - informed about anything but consumption is neither safe nor justified: a consumer consumes ... that's it, nothing more.
If you want to know about the confidence of the US consumer, this index probably indicates it fairly accurately with all that implies. I think many here are given to expecting more of people than, unfortunately, is realistic. We should consider the possibility that there is no need for the Conference Board to fudge its data, rather that it may be our expectations that are skewed; that, yes, the persons surveyed really did profess a rather hefty increase in confidence - though we find it so ridiculous that we are driven to doubt the surveyor rather than the surveyed.
As Tyler said, "it[']s all about expectations" - theirs and ours.
Just my 2 cents.
Astute/Succinct +1
or it's cooking the books. as in audiing if there is a "jump" in the number out of line with expectation, look into further for signs of fraud.