U.S. consumer confidence soared in May

[jimmy olsen]

Finally some good news.

http://www.msnbc.msn.com/id/30941605/

U.S. consumer confidence soared in May
Highest level since September; a sign that economy stabilizing

updated 1 hour, 42 minutes ago

Consumer confidence extended its rebound in May, soaring to the highest level since last September as more shoppers are feeling the worst of the recession is behind them.

The Conference Board said Tuesday that its Consumer Confidence Index, which had dramatically increased in April, zoomed past economists' expectations to 54.9 from a revised 40.8 in April. Economists surveyed by Thomson Reuters were expecting 42.3. In February, confidence levels had hit a new historic low of 25.3.

The reading marks the highest in eight months when the level was 61.4. The levels are also closer to the year-ago's 58.1, though the widely watched barometer is still below 100, which indicates a healthy economy.

The Present Situation Index, which measures how shoppers feel now about the economy, rose to 28.9 from 25.5 last month. But the Expectations Index, which measures shoppers' outlook over the next six months, climbed to 72.3 from 51.0 in April.

Investors focused on the upbeat sentiment reading, shaking off a mostly downbeat report on the housing market, also released Tuesday. In midmorning trading, the Dow Jones industrial average rose 130.62, or 1.6 percent, to 8,407.94.

"Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. "While confidence is still weak by historic standards, as far as consumers are concerned, the worst is now behind us."

The confidence report offered encouraging news to merchants, which are counting on consumers to be in the mood to spend after confidence plummeted to historic lows late last year but has been rising since March. A two-month stock rally has helped make shoppers feel a little better about their retirement funds, spurring dramatic rebounds in confidence in April and May levels.

Meanwhile, better-than-expected earnings results from such retailers as Sears Holdings Corp. and Gap Inc. have offered the latest evidence that spending has begun to stabilize, though overall business is still weak.

The size of the monthly increases in April and May in consumer confidence encouraged economists. Gary Thayer, chief economist at Wells Fargo Advisors, says that unless the economy suffers from major financial shocks, it looks like "we've turned the corner" on confidence.

"This is a significant change," said Thayer. "While (consumers) are unhappy about their job situation and their home values, they see light at the end of the tunnel." He added, however, sentiment has a way to go before shoppers go back to splurging. That can only happen when the job and housing markets, which have been holding down sentiment, start to turn around.

The latest report on home prices, released Tuesday, wasn't comforting. Home prices fell at the fastest annual rate on record in the first quarter, though the pace of month-to-month declines continues to slow, according to a closely watched housing index.

The Standard & Poor's/Case-Shiller National Home Price index reported home prices tumbled by 19.1 percent in the first quarter, the most in its 21-year history.

Home prices have fallen 32.2 percent since peaking in the second quarter of 2006 and are at levels not seen since the end of 2002.

Meanwhile, Americans continue to cut back on nonessentials like furniture while focusing on buying necessities as they worry about their jobs. The unemployment rate is expected to climb to 9.2 percent in May from 8.9 percent in April and employers are expected to shed a net total of 523,000 jobs, according to economists surveyed by Thomson Reuters. The Labor Department is expected to release unemployment figures on June 5.

The Consumer Confidence survey — whose responses were received through May 19 from a representative sample of 5,000 U.S. households — showed a marked improvement in consumers' outlook for jobs. The percentage of consumers expecting more jobs in the months ahead increased to 20.0 percent from 14.2 percent, while those anticipating fewer jobs declined to 25.2 percent from 32.5 percent. The proportion of consumers anticipating an increase in their incomes edged up to 10.2 percent from 8.3 percent.

© 2009 The Associated Press

[DGuller]

I knew Obama would come through for us.

[Valmy]

I knew Obama would come through for us.

Our savior!

[Siege]

My wife's consumer confidence have never waived.

[DGuller]

My wife's consumer confidence have never waived.

[lustindarkness]

My wife's consumer confidence have never waived.

[Malthus]

My wife's consumer confidence have never waived.

[Neil]

Never underestimate the stupidity of the average American.

[KRonn]

This is but a temporary blip before the gathering economic storm....   

[Fireblade]

This is but a temporary blip before the gathering economic storm....   

The Jewcolypse

[Sheilbh]

This is but a temporary blip before the gathering economic storm....   

We've experienced the same in the UK. 

A lot of consumer spending at the minute is based on very heavy discounting by retailers so it's not having the same effect that similar spending a year or two would have. 

In the UK there are also still details that need ironing out about retail firms who are partly or wholly owned by financial investment firms that have since gone bust - House of Fraser's the biggy.  Most of them will survive because the weaker operators have already gone into administration, but they've not found a buyer as yet and a lot will ride on how well they perform in the short term.

The big retailers are all still saying that they think there's worse to come.

Having said that a lot of smaller operators have come out of the crisis and are now getting ready to change their strategy (Jessop's) and begin expansion again.

Sheilbh, retail consultant extraordinaire.  Though I'm still unsure what exactly retail consultancy involves....

[Monoriu]

My wife's consumer confidence have never waived.

It is your sacred duty to resist!

[Monoriu]

I've been using a mobile phone that is a gift from the bank for almost 3 years.  It is obviously sliding the down the path toward oblivion, because it has started to spontaneously switch itself off at random times.  I've been eyeing a replacement that will cost me around US$40-50. 

I am doing my part to tank the world economy by cancelling the replacement plans. 

[KRonn]

This is but a temporary blip before the gathering economic storm....   

We've experienced the same in the UK. 

A lot of consumer spending at the minute is based on very heavy discounting by retailers so it's not having the same effect that similar spending a year or two would have. 

In the UK there are also still details that need ironing out about retail firms who are partly or wholly owned by financial investment firms that have since gone bust - House of Fraser's the biggy.  Most of them will survive because the weaker operators have already gone into administration, but they've not found a buyer as yet and a lot will ride on how well they perform in the short term.

The big retailers are all still saying that they think there's worse to come.

Having said that a lot of smaller operators have come out of the crisis and are now getting ready to change their strategy (Jessop's) and begin expansion again.

Sheilbh, retail consultant extraordinaire.  Though I'm still unsure what exactly retail consultancy involves....

I sure hope we're turing a corner to a better economy, but I'm worried about the impact of some of the actions taken. Huge spending, printing/borrowing money, and hearing some of the same things you mention, regarding banking, that it may be a temporary blip due to many people refinancing homes with a good mortgage rates right now, but that may not be a sustainable effect.

[saskganesh]

job losses are still happening; now the car dealer closures will have ripple effects in the next quarter and beyond. I see a retail hit coming, as too many stores for not enough customers. the malls near lots especially.

lots of bargain real estate around now due to closures. not the kind of real estate recovery people want to hear.