Consumer confidence in the United States climbed to the second highest level since the financial crash yet there is a notable gap between the satisfaction felt by Americans about their current situation and their hopes for the future.
Overall consumer sentiment rose to 101.3 in March, according to the Conference Board, well ahead of the 96.4 forecast from the Reuters survey of economists. February’s result was revised higher to 98.8 from 96.4.
The measure of consumer’s expectations for their situation in six months rose to 96.0 in March from 90.0 the prior month. The was the third best score for this index since the financial crisis and end of the recession in June 2009 after January's reading of 97.0 and 97.49 in February 2011.
Assessments of the labor market were mixed. The percentage of people noting ‘plentiful jobs' rose to 20.60 from 20.40. Those stating that jobs were 'not plentiful' slipped to 54.0 from 54.60. But those saying that jobs are 'hard to get' also rose to 25.40 from 25.10.
Income expectations were strong. The number of people forecasting an improvement in their income in six months rose to 18.40 in March from 16.40, and the number anticipating lower wages dropped to 9.90 from 10.80 in February. Those expecting the 'same income' slipped to 71.70 from 72.80.
At the same time that consumers seem to be hopeful about the future the assessment of their current situation fell to 109.10 in March from 112.10 in February. It was the second straight decline from the post-crisis peak of 113.90 in January.
The January top in the current situation index came more than five years after the cycle low of 20.21 in December 2009. That recovery period from trough to peak is comparable to the last two cycles.
From the bottom in September 2003 it took consumers just under four years to regain their exuberance. A slightly longer period of about four and a half years was needed from January 1996 to July 2000.
There is however one striking and progressive difference between all three cycles. In each case the overall attitude of consumers concerning their current situation seems to be suffering a steady and unreserved decline, with lower lows and lower highs in the indices as the 20 years unwind.
In the first cycle the low in January 1996 was 101.09, not far from the current high of 109.10. The top in mid-2000 was 186.84. The next round saw a low of 59.70 in September 2003 flowed by a top of 138.47 in March 2007.
The latest cycle witnessed the low at 20.12 in December 2009 and the top so far has been in January at 113.90.
Over two decades from January 1996 to Jnayary 2015 the peak of the index where the American consumer judges their own situation has plunged 64 percent from 186.84 to 113.90 and the troughs have deepened 80 percent from 101.09 to 20.21.
The July 2000 peak at 186.84 was also the all-time score for this index which goes back to almost 50 years to April 1967. The peak prior to the July 2000 top came almost 12 years earlier in December 1988 and had a comparable score at 140.12 and the one before that was in October 1978 at 124.88.
American consumers probably have more material goods than they had 15 years ago at the time of the record in consumer satisfaction in 2000. They certainly have more goods than any at any peak prior to that, yet their satisfaction, can we say happiness, as measured by the Conference Board indices, has been on steady decline for 15 years.
The Conference Board Survey sticks pretty close to material welfare, 23 of the 58 component indices gauge purchase plans for large ticket items like autos and homes, and another 9 relate to jobs and income. Many of the others break satisfaction down into age and income groups or inquire about anticipated inflation and equity levels.
The rising tide of American consumer satisfaction after 1980 peaked around the turn of the century. Since then and perhaps surprisingly, American responses seem to be expressing something about their lives that is more than the sum of their possessions.
They do, however, remain optimistic about the future.
Chief Market Strategist
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Conference Board Consumer Confidence Present Situation