Friday, January 13, 2012

A better consumer is more than a rumor! U of M survey jumps

Expectations and current conditions rise sharply

The U of M Survey’s expectations component is make the sharpest rise in all of this recovery period. The five month rise in the expectations reading is the greatest five month rise since the period ending in December 1992. Still, with this gain sentiment is not at a new cycle high. The cycle high stand s at 76.

Current conditions have improved sharply as well. The five month gain was previously larger in the five month period ended in January 2010. At a level of 82.6 the current index is also shot of the cycle high reading which is at 86.9.   

But the charts tell the story of momentum. And there are aided by stories of corporate leaders finally getting ready to hire.

CEOS apparently are undeterred by the risk in Europe. US consumers not surprisingly are not being affected by talk of a Euro collapse. See story ( Indeed even Europe is not much affected as its bond auctions have picked up the wake of the ECB giving banks three-year credit lines. Even the recent LEIs (Leading Economic Indices) from the OECD did not find a whiff of recession. To be sure the OECD gauges see many slowdowns but they were not projecting recessions as of November data.

Trade data from Europe tell a story of an export bulge that is hard to understand. Meanwhile US trade data show exports are losing momentum.  US imports are holding up better but hardly are they surging, with the exception of oil.

To be sure the global markets are a series of cross currents. But the US consumer data is some of the best stuff we have seen so far. Since December 2006 there have only been two times when the Bloomberg weekly consumer comfort index which has risen in 10weeks by 8points has exceeded such a gain. We can be pretty sure when various measures of confidence using different survey questions and horizons begin to tell a similar story. We know have not really good eye witness news and come corroborating evidence.



The problem is a lack of consumer spending. The Money is very concentrated in the hamds of a few not in the hands of the many.


Consume consume consume