The housing market remains in peril and the labor market isn't much better. But American consumers are hoping that change is coming for the better, according to those polled by the Conference Board.

The group's monthly index of consumer confidence jumped in May to 54.9 (the highest reading in eight months) from April's revised reading of 40.8. This nearly 35% move is the largest one-month increase since April 2003. What's more, it is well above economists' expectations of 42.0.

The number of respondents noting that jobs are "hard to get" declined slightly to 44.7% from 46.6%. On the flip side, those describing available jobs as plentiful edged up to 5.7% from 4.9% last month. In other news, the number of Americans who plan on buying a car in the next six months rose to 5.5%, the highest figure in a year. Just 2.3%, however, plan on buying homes in this so-called buyers' market.

It is a bit odd that when both consumer confidence and housing prices hit levels of virtual collapse the market does little other than move up.

The Conference Board said that its consumer confidence index dropped to 38, an all-time low. The Case-Shiller price index published today by Standard & Poor's showed that housing values in major metro areas dropped 18% in October compared to the same month last year.

The only plausible explanation for the market's indifference is the idea that all the bad news is already priced into equities. If so, trading may turn ugly early next year when stockholders find out this bad news is only the beginning.

The index of Leading Economic Indicators increased 0.1% in March 2008, the Conference Board announced Thursday (pdf), with the organization adding that weak growth conditions may persist in the second half of 2008.

Economists surveyed by Bloomberg News had expected the index to increase 0.2% in March 2008. The index decreased a revised 0.3% in February 2008 and decreased 0.4% in January 2008.

It was the first rise for the index after five straight monthly declines. Five of the ten indicators that comprise the leading index increased in March 2008. The positive contributors ---starting with the largest ---were: real money
supply, index of supplier deliveries (vendor performance), interest rate spread, average weekly, manufacturing hours, and manufacturers' new orders for consumer goods and materials.

Average weekly initial claims for unemployment insurance made up the largest negative contributor to the index.

Difficult business conditions persist

Economist Glen Langan told BloggingStocks Thursday that even though the index increased slightly in March 2008, ending a a 5-month slide, the statistic still suggests a tough road ahead for the U.S. economy. "It's the smallest of rises, one that's hardly indicative of a reverse in economic trends. The index could resume sliding next month," Langan said. "We had no job growth in the first quarter, declining profits, and a housing sector in a severe correction or worse, so we're staring slow growth or no growth right in the face. Economic conditions and consumer demand in the second quarter are likely to remain challenging, to say the least."

The leading index now stands at 102 (base year is 2004 = 100). During the six-month period through March 2008, the leading index decreased 1.6%, with only three out of ten components advancing.

The index of leading economic indicators declined 0.1% in January 2008 -- its forth consecutive monthly decline, the Conference Board announced Thursday, suggesting the U.S. economy is likely to register weak growth in the period ahead.

One bright spot: the group's coincident index, which measures current conditions, rose 0.1% in January 2008, indicating that the economy wasn't in recession last month.

The Conference Board said five of the 10 components that make up the leading indicators -- stock prices, building permits, manufacturers' new orders, non-defense capital goods, and interest-rate spreads -- declined in January 2008. Real money supply, average weekly jobless claims, and consumer expectations/vendor performance increased. Average weekly manufacturing hours and manufacturers' new orders for consumer goods/materials remained the same.

The nation's economy is more likely to experience additional economic weakness and slowing growth in the months ahead, according to data released by the Conference Board Friday.

The Index of Leading Economic Indicators declined again in December 2007, down 0.2%, worse than the 0.1% decline estimate, the Conference Board announced Friday in a statement (pdf). The index dropped 0.4% in November 2007.

Declines in 4 of 6 months

It was the third consecutive decline for the leading index, which has also dropped in four of the last six months.

The largest negative contributors to the index in December 2007 were housing permits, average working hours in manufacturing, new orders for non-defense capital goods, initial unemployment claims, and consumer expectations.

This may turn out to be a holiday season only The Grinch could love.

The closely watched Conference Board index of consumer confidence fell to 87.3 in November, its lowest level since Hurricane Katrina in 2005, while house values fell 4.5% in the third quarter, the biggest drop since S&P/Case-Schiller started tracking them in 1988, according to Bloomberg News. Rising foreclosures will sap billions from major metropolitan areas next year, according to a report released today by the National Conference of Mayors.

To put it bluntly, despite the hoopla over Black Friday and Cyber Monday, all indications show that consumers are telling retailers "bah humbug." Does this mean that Santa (AKA Federal Reserve Chairman Ben Bernanke) will bring more holiday rate cuts? At least one fed official says no.

In a speech today in Rochester, NY, Charles Plosser of the Federal Reserve Bank of Philadelphia said that he isn't inclined to seek another rate cut unless growth in 2008 is much weaker than expected. Besides, a weaker economic outlook for next year was considered when the Fed cut rates in October.

The stock market, though, continues to act irrationally.

Today, the Dow Jones industrial average surged 215 points to 12,958.44 after Citigroup Inc. (NYSE:C) got a $7.5 billion investment from a fund tied to the government of Abu Dhabi. That's nice but as Bloomberg News points out, that investment came with a steep price.

"Citigroup Inc., the biggest U.S. bank, is paying a "junk bond'' rate to uphold Chairman Robert Rubin's pledge to preserve the dividend and weather this year's mortgage-market decline," the news service says. "The 11 percent interest rate on $7.5 billion of convertible shares that Citigroup sold to the Abu Dhabi Investment Authority is almost double the rate it offers bond investors."

This proves that there is no so such thing as a free lunch.

Economists and CEOs have vastly different views on the economy.

A Wall Street Journal (registration required) poll of economists surveyed between Oct. 5 and Oct. 9 showed that on average they put the chance of a recession at 34%, down from 37% in September.

Is it a big deal that economists are 3% more optimistic than they used to be? Well, that depends. Though the dismal scientists expect the federal funds rate to be reduced one more time this year by one-quarter percentage point, they are pretty downbeat on the housing market.

Many, though, apparently see the glass as half full.

"Some of the uncertainties have faded, partly due to the fact that the Fed moved more aggressively," Lou Crandall, chief economist at Wrightson ICAP, told the Journal. "The Fed's willingness to pull out all the stops played a role in bolstering the economy."


In fact, 44.3% of the 61 top CEOs expect economic conditions in their industries to get worse, up from 24.4% in February. Almost 60% of those surveyed expect the U.S. economy to get worse, up from 24.4% a year earlier.

So who are you going to believe?