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Consumer Confidence At A One-Year High

March 27, 2012

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This morning, the Conference Board released data on another closely-watched economic front: Consumer confidence.

What this report measures is somewhat self-explanatory. Every month, the Conference Board surveys 5,000 households to figure out their take on current conditions as well as their expectations for the future. The report is interesting as it may predict shifts in consumption patterns and is a further indication of how consumers are feeling about the overall economic picture.

Specifically, in February, consumer confidence held at 70.2. This is near the highest level in the past 12 months and fell inline with economists' expectations. What got U.S. consumers excited in February were the improvements on the jobs front as well as unexpected stock-market gains.

This measure of consumer confidence has been on a tear since October, when the index bottomed out around 40. The index has also improved by leaps and bounds since the low point of the recession. However, I do expect that the index may start to level off in the coming months due to higher gas prices.

Later this week, we'll hear the results from the University of Michigan's own consumer confidence index. This index is quite similar to the Conference Board's–except that it releases two readings each month–a preliminary reading and a final reading. During the summer months, the two indices diverged, but lately they have been moving in lockstep.

In the meantime, I'll welcome any good news from the consumer front as consumer spending composes two-thirds of the national economy. Although gas prices may impede significant gains, there are enough bright spots in the economy to keep consumers relatively optimistic. As I mentioned yesterday, we have big news on national Gross Domestic Product due on Thursday morning, and I'll check in with more details as they come out.

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