28/2/16: Every Little Hurts: U.S. Consumers and Inflation Perceptions

I have written quite a bit about the wobbles of time-space continuum in the U.S. economic growth universe in recent months. But throughout the entire process, the bedrock of U.S. growth - consumer sentiment - appeared to be relatively stable as if immune to the volatility in the fortunes of the broader economy.

This stability is deceptive. Here is a chart plotting sub-series in the University of Michigan surveys of consumer confidence:

The above shows several things, some historical, others more current.

Firstly, the impact of the crisis of 2008 and subsequent second dip in the economic crisis fortunes in 2011. These were sizeable and comparable in terms of the magnitude to the abysmal late 1970s-early 1980s period.

Secondly, a steady decline in inflationary pressures on households since the early 2012. A trend bending solidly the Fed narrative of well-anchored inflationary expectations post-QE. A trend that accelerated since mid-2014 to flatten out (without a solid confirmation) toward the end of 2015.

Thirdly, a longer view of the things: despite low by historical standards inflation, the share of U.S. households still concerned with its impact on their well being is... err... high and sits well above the average for 1993-2004 golden years of the first 'Great Moderation'.

All of which, in my view, continues to highlight the utter and complete failure of traditional fiscal-monetary policies mix deployed since 2008 by the U.S. Fed and richly copied by the likes of the ECB. It also reflects a simple fact that inflation (even at near-zero bound) remains a concern for households who experience decades of weak income growth.

If, per Tesco adds, every little helps, then, when it comes to the household wealth destroying economic policies, every little also hurts...

30/08/2011: US Consumer Sentiment collapses in August

The US Conference Board Consumer Confidence index fell in August, confirming other readings of Consumer Sentiment in the US released earlier (see chart below). The Index now stands at 44.5, down from 59.2 in July.

• The Present Situation Index decreased to 33.3 from 35.7.
  
• The Expectations Index decreased to 51.9 from 74.9 last month.
  
• US Consumer Confidence index is now at its lowest level since April 2009 (40.8).
  
• Consumers claiming business conditions are "bad" increased to 40.6 percent from 38.7 percent,
  
• Consumers' assessment of employment conditions was more pessimistic than last month. Those claiming jobs are "hard to get" increased to 49.1 percent from 44.8 percent, while those stating jobs are "plentiful" declined to 4.7 percent from 5.1 percent.
• Those expecting business conditions to improve over the next 6 months decreased to 11.8 percent from 17.9 percent,
  
• Those expecting business conditions to worsen over the next 6 months surged to 24.6 percent from 16.1 percent.
  
• Those anticipating more jobs in the medium term future decreased to 11.4 percent from 16.9 percent, while those expecting fewer jobs increased to 31.5 percent from 22.2 percent.
• The proportion of consumers anticipating an increase in their incomes declined to 14.3 percent from 15.9 percent.

Earlier-released University of Michigan Consumer Sentiment Index for August 2011 posted a decline from 63.7 in July to 54.9 - the lowest reading since May 1980 (see chart).