U.S. consumer confidence in July remained near 28-year lows, an indication American adults continue to be concerned about rising energy and food prices, job layoffs, and the prospects for a U.S. economic recovery.
The July reading was a scant rise and hardly a positive data point for the economy, given that June's reading was the index's lowest since May 1980 -- a period also characterized by high oil/gasoline prices and a sluggish U.S. economy.
Economist Peter Dawson told BloggingStocks Friday July's consumer sentiment reading did nothing to shift his evaluation regarding the American people's stance toward the U.S. economy.
"The public remains guarded and concerned, with little optimism, save for a few, fortunate income and wealth segments. We have the most serious economic downturn in a decade, from the stand point of the typical person or employee. Consumers are seeing gasoline and food prices rise by the week, and they're concerned about job losses," Dawson said. "When you combine job worries with price rises just about everywhere you look, with a housing sector that shows little signs of recovery, and the lower home values that trend implies, it doesn't breed consumer confidence, so it's not surprising the [University of] Michigan survey reading is near its lowest point in decades."
U.S. consumer confidence in May 2008 plunged to its lowest level in almost 28 years, an indication American adults are very concerned about the near-term health of the U.S. economy as it slides into its first recession in six years.
It was the index's lowest reading since June 1980 -- a period also characterized by high oil/gasoline prices and a sluggish U.S. economy.
Economists surveyed by Bloomberg News had predicted that the April 2008 index would fall to 62.5. The index stood at 63.2 in April 2008 and 69.5 in March 2008.
'An awful number'
Economist Peter Dawson told BloggingStocks Friday May's consumer sentiment reading reflects conditions on the ground. "It's an awful number, but it reflects conditions on Main Street, as the typical person experiences them," Dawson said. "We've got falling home prices, record-high gas prices, rising food prices, property taxes increasing in many areas, and no job growth. It's not a happy time for Americans right now and the University of Michigan sentiment numbers reflect that."
The Reuters/University of Michigan Surveys of Consumers shows consumer sentiment at a 26-year low: "The April result is the lowest since March 1982's level of 62.0., when the "stagflationary" period of low growth and high inflation was still an issue for many Americans."
But is that a bad thing? A quick look at history shows that it probably isn't. The last time consumer sentiment was this low was right before the beginning of the longest bull-run in history. The best book on that era is called Bull: A History of the Boom and Bust: 1982-2004. The chart below of the Dow Jones Industrial Average performance during 1980-2000 pretty much tells the story. See the little divot on the far left side? Yeah, that was 1982.
So don't get too depressed about consumer weakness. The last time things looked this bad, they ended up working out better than ever. And anyone who sold on the scary headlines regretted it very quickly.
U.S. consumer confidence in April 2008 plunged to its lowest level in 26 years, suggesting American adults are becoming more concerned about the near-term health of the U.S. economy as it slides into its first recession in six years.
Economist Glen Langan told BloggingStocks Friday the April 2008 consumer sentiment index is a decidedly negative reading. "It indicates concern about the slowdown has permeated the public. Negative sentiment is working its way through the real economy. Consumers are expressing a great deal of concern about high gasoline, oil and food prices, the job situation, and the uncertain economic landscape," Langan said. "It's a real harbinger because consumer activity is key to U.S. economic growth, accounting for about 65% of GDP."
Langan said the United States is almost certainly in recession. "If the nation isn't in a recession, we'll record nil growth, maybe 0.2% or 0.3%, in the first quarter," he said.
Langan added that there's a 50-60% chance the U.S. will remain in recession after Q2 2008.
U.S. consumer confidence in early April 2008 plunged to its lowest level in 26 years, suggesting American adults are becoming more concerned about the near-term health of the U.S. economy as it slides into its first recession in six years.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of confidence fell to 63.2 in April 2008 from 69.5 in March 2008. It was the index's lowest reading since it fell to 62.0 in March 1982.
Meanwhile, the index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, fell to 53.4 in April 2008 from 60.1 in March 2008. It was the expectations index's lowest reading since November 1990, Reuters reported Friday.
'A really bad number'
Economist Peter Dawson, who did not participate in the survey, told BloggingStocks Friday there's no way to sugarcoat the latest consumer sentiment reading. "It's a really bad number. Just awful. Consumers are expressing serious concern about high gasoline, oil and food prices, the threat of job layoffs, and the general the state of the economy," Dawson said. "Given that consumer spending a represents about two-thirds of economic activity, it doesn't bode well for the economic recovery timetable."
With the above in mind, Dawson said those who expect a U.S. economic recovery to start as early as Q3 2008 "are at the extremely optimistic end of the recovery spectrum."
U.S. consumer sentiment fell to 69.5 in March 2008 from 70.8 in February 2008, as measured by the Reuters/University of Michigan Consumer Sentiment Index. (pdf)
Meanwhile, the current conditions index rose to 84.2 from 83.8 in February 2008. The expectations index declined to 60.1 from 62.4.
The most recent survey found that consumers were nearly unanimous in the opinion that the economy had already slipped into a recession, Reuters/University of Michigan survey research indicated. Consumers have adopted much more cautious spending plans, shifting more toward repaying debts and rebuilding their savings, the research indicated.
Further, a recession has occurred whenever the sentiment index declined as much as it has fallen during the past year, according to Richard Curtin, Director of the Reuters/University of Michigan Surveys of Consumers.
Economic Analysis: Economists tend to place less emphasis on the sentiment barometers, preferring to emphasize the 'iron and steel data' of U.S. economy metrics: production, corporate profits, housing starts, job growth, etc., which provide more-tangible indicators of economic activity. That said, the latest Reuters/UMich. consumer sentiment data is not on a positive track. Consumers, weighed down by rising gasoline and heating oil prices, the housing slump, and sluggish job growth, are understandably downbeat about the economy and its immediate prospects.
The expectations index, which some economists and analysts say is a lead indicator regarding future consumer spending, fell to 61.4 in March 2008 from 62.4 in February 2008.
Also, consumers surveyed said they expect inflation to run at a 4.5% annualized rate in 2008, compared to a 3.6% annualized rate projected in February 2008.
Economic Analysis: The key dimension of the March 2008 Reuters/UMich. survey is the 16-year low for the sentiment index. Rising energy prices, news of continued stress in credit markets, the housing market's decline, and low/negative job growth are all weighing on consumers, and the survey data reflect the above. The reading also suggests big-ticket retail sales -- an important component of U.S. economic activity -- may have a tough time recovering in the immediate months ahead, as consumers typically delay/cancel purchases of big-ticket items during periods of low consumer confidence.
The consumer sentiment index has dropped about 10 points since its 80.9 level in October 2007.
The current conditions index fell to 83.8 in February 2008 from 94.4 in January 2008, while the expectations index fell to 62.4 from 68.1.
Meanwhile, 1-year inflation expectation increased to 3.6% in February 2008 from 3.4%, while the 5-year inflation expectation remained unchanged at 3.0%.
Economic Analysis: The February 2008 statistic -- the sentiment index's third decline in the past four months -- indicates U.S. consumers continue to be concerned about the U.S. economy. Almost as important as real income gains and wealth gains, consumer sentiment is a telling statistic because sentiment, or consumer bullishness/bearishness, frequently precedes an increase/decrease in spending. Further, while the relationship between confidence and spending is not perfect, continued declines/increases in consumer sentiment over several months is viewed as an accurate gauge concerning whether they believe economic conditions are improving or deteriorating.
Despite concerns to the contrary, Wal-Mart (NYSE: WMT) is still growing. It posted the first $100 billion quarter in its history. The world's largest retailer said net sales for the fourth quarter of fiscal year 2008 were $106.269 billion, an increase of 8.3% from the year-earlier period. Earnings from continuing operations were $1.02 per share, up 7.4% from 95 cents a year earlier, including a net charge of approximately 2 cents per share for certain items this year.
The top-line numbers were a bit misleading. US sales at the Wal-Mart flagship brand rose a pathetic 5% to $67.4 billion. Sales from international operations rose almost 19% to $27 billion. At that growth rate, overseas sales could match domestic sale in seven or eight years.
Operating income overseas rose over 14% to more than $1.7 billion, or 23% of the global total.
Wal-Mart says it expects expects earnings of 70 cents to 74 cents for the first quarter of fiscal year 2009, and between $3.30 and $3.43 for the full fiscal year 2009. Both numbers were below analysts' estimates of 74 cents and $3.44.
It is clear that Wal-Mart will now have to rely almost completely on international sales to meet its forecasts for the up-coming year. China and Mexico better deliver.
With economic worries sending luxury goods makers like Coach Inc. (NYSE: COH) and Tiffany & Co. (NYSE: TIF) well off their highs, at least one super-investor who isn't afraid to go against the conventional wisdom is taking notice.
Nelson Peltz and his Trian funds have upped their stake in Tiffany from 5.6% to 7.9% amid continued weakness in the company's share price -- the stock is already down 20% year to date.
According to the Wall Street Journal [subscription], Peltz has previously said he isn't seeking a seat on the company's board, but wouldn't rule out the possibility of taking an activist stance somewhere down the road. Another big drop could prod him to step in and try to make something happen.
Tiffany recently reported a weak holiday sales period, a strong indication that the economic malaise that started in subprime may be carrying over to more upscale consumers. In recent years, Tiffany's and other luxury goods makers have seen their markets expand to include more luxury aspirational customers. Dependence on less wealthy consumers for sales growth may be making the luxury goods sector less immune to economic woes than it has been historically.
Consumer sentiment fell to its lowest level in two years in November, according to the Reuters/University of Michigan Surveys of Consumers.
The figure was 76.1, above the 75 expected by economists but below October's 80.9 level, according to a Reuters report. What a shock.
This holiday season, many consumers aren't feeling that thankful for the worst housing market in 16 years -- according to the National Association of Realtors, housing prices fell in one-third of U.S. cities. Gas prices reaching $4 per gallon is further spooking people already nervous about the volatile stock market and the weak dollar. Oh, let's not forget about the prospect of $100 oil.
"We're facing extreme price increases in energy, and it's clear the consumer is becoming more aware of the pressures being put on them,'' Lindsey Piegza, an analyst at FTN Financial, told Bloomberg News. "I don't expect a collapse in spending, but it will be very weak for the holidays.''
I live on the West Coast, so I wake up to news of the early trends in the market. This morning seemed a bit glum, the kind of day that (if my mood was made entirely of markets) I might have just rolled back over.
Good thing I got up. By the end of the day, the DJIA had surged 187 points to 13,482.35, its biggest one-day gain since the summer of 2006 (ahh, the summer of 06!). The 10-year treasury rate had a lot to do with it -- falling to under 5.2% after a surge to 5.3% in the early hours.
Best of all, according to a quote from Alan Gayle, senior investment strategist at Trusco Capital Management: "the consumer is holding up." Maybe that doesn't seem like a convincing reason to send stocks soaring (I'd love to see "filled with optimism" or "doing better than ever" or even "rolling in unspent greenbacks." That would be nice), but it was enough, and all the photos of traders would make good illustrations for The Wall Street Book of Smiles.
U.S. consumer confidence in early April 2008 plunged to its lowest level in 26 years, suggesting American adults are becoming more concerned about the near-term health of the U.S. economy as it slides into its first recession in six years. 
Despite concerns to the contrary, 
With economic worries sending luxury goods makers like 
Consumer sentiment fell to its lowest level in two years in November, according to the Reuters/University of Michigan Surveys of Consumers.
I live on the West Coast, so I wake up to news of the early trends in the market. This morning seemed a bit glum, the kind of day that (if my mood was made entirely of markets) I might have just rolled back over.
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