US Consumer Confidence

In September 2010, the estimate of US consumer confidence, as measured by the Conference Board, fell sharply further to 48.5 index points, from a revised 53.2 in August 2010. The market was expecting the confidence index to fall to 52.1. The cut-off date for the survey was 21 September 2010.

The Present Situation Index fell to 23.1 from a revised 24.9 in August 2010, which is obviously extremely low by historical standards. The Key Expectations Index also fell in September to 65.4 from 72.0 (the long-term average for the expectations index is around 92).

The University of Michigan consumer confidence reading has also followed a similar downward trend in recent months.

According to the Director of the Conference Board Consumer Research Center; "September’s pull-back in confidence was due to less favorable business and labor market conditions, coupled with a more pessimistic short-term outlook. Overall, consumers’ confidence in the state of the economy remains quite grim. And, with so few expecting conditions to improve in the near term, the pace of economic growth is not likely to pick up in the coming months."

Overall, the US confidence level remains extremely low by historical standards and well below the long-term average of around 95. Over the years, the single biggest factor that impacts consumer confidence is the state of the labour market, which is still struggling to gain traction, especially in the private sector. There is also a basic relationship between consumer confidence and consumer spending.

The Consumer Confidence Survey is based on a representative sample of 5 000 US households.

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