Consumer Confidence

Economy analysts like Squawk on the Street, Erin Burnett, CNBC, are reporting recessionary fears as the unemployment rate reached 5%, retail sales were weak in December, and consumer confidence is low. About 43% of economists are predicting a recession in 2008 unless the Fed takes action later this month. An AP report is here. The Dismal Science is acting like Chicken Little these days.

The Conference Board has the gated index here. Note: this isn't the Survey of Consumer Sentiment that the University of Michigan releases. The Conference Board survey has confidence up slightly for December at 88.6 from November's 75.5. The index base year is 1985 = 100. A falling index indicates that consumers will spend less which might spur the Fed to lower interest rates. The Fed watchers are predicting a 25 to 50 basis point decrease in interest rates at the next FOMC meeting at the end of this month. Declining consumer confidence is bad for stocks as business profits should decline.

Consumers make up about 67% of the spending so measuring the confience is a lagging indicator of the state of the economy. The broadest index is the Conference Board which surveys 5,000 households of which about half respond. Consumers are fickle and so is the survey. I've never had confidence is what the average consumer has confidence in since economic conditions are so exogenous.