US Consumer Confidence Unexpectedly Improves But Are Things Improving?

Daily Forex Fundamentals | Written by DailyFX | Nov 14 08 15:32 GMT |

The preliminary reading of the Reuters / University of Michigan consumer confidence survey for November improved unexpectedly over the previous month's reading. However, should we take this to mean conditions are genuinely improving for Americans and that we should assume spending will recover in short-form? No. It's true that economists were expecting a drop in this sentiment gauge to 56.7, but actually marked a 0.3 point improvement to 57.9. Despite this modest uptick though, we have to remember that the indicator is hovering just above 28-year lows. Considering policy authorities have consistently downgraded their growth forecasts, employment and income is tumbling quickly and weatlh is virtually collapsing, the outlook looks much worse than what has already been seen so far. Looking at the component breakdown of the indicator, the economic conditions indicator edged off its record (going back to 1978) low - perhaps a more realistic forecast for trends than through the volatile forecasts for expectations. The outlook dropped month over month, but was still above its own 28 year low. However, this comparatively reserved decline is likely due to the ongoing drop in energy costs and a brief stability in stock portfolios and retirement accounts. The most impressive shift in the breakdown was the drop in one-year inflation expectations. Gapping from 3.9 percent to 2.9 percent - owing largely to the drop in heating oil and gasoline prices - the Fed's monetary policy until now has been subsidized by the populace. More importantly, the expectation for prices to fall going forward may be an early sign that consumers will increase their spending habits (within their capacity given empoyment and income) going forward. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.