March’s Consumer Confidence Research Notes

by Jim Baird on March 31, 2015

CaptureConfidence rebounds in March on stronger expectations

The tone was a bit more optimistic in March, as the Conference Board Consumer Confidence Index was lifted by improving expectations for the economy.  The index rose to 101.3 from an upwardly revised 98.8 in February.

Confidence spiked at the beginning of the year as gas prices plummeted and job creation remained robust.  Although the index took a step back in February, the collective consumer mood remains upbeat and measures of sentiment remain on a generally positive path higher.

While the future outlook improved in March, consumers’ views about current economic conditions softened for the second straight month.  Outside of the generally good news on the jobs front, the recent softness in some economic data has not been lost on those surveyed.  The silver lining here is that it appears that most believe the slowdown to be temporary.

Confidence readings tend to be highly correlated with stock prices, which are floating near all-time highs; the jobs market, where we’ve seen robust gains over the past 18 months; and gasoline prices, which are over $1 per gallon lower than one year ago.  That decline should put some additional cash into consumers’ pockets, but thus far has not had a material positive impact on discretionary spending.  Consumers are likely to adjust their spending habits should lower prices become entrenched for an extended period.  For now, they appear content to pocket the savings.

Confidence remains near post-recessionary highs, and for good reason.  Collectively, household balance sheets appear to be relatively stable.  Given debt service costs as a percentage of total income, consumers appear to have the ability to tap credit to fuel additional purchases.  However, credit availability is more limited than in the heyday of the credit bubble, and the household preference to stash away additional cash in savings remains higher than it was prior to 2008.

Market Perspectives (March 2015)

by Jim Baird on March 30, 2015

Executive Summary

  • February was a good month for equities, as all major U.S. indices erased their January losses and ended the month in positive territory for the year.
  • International stocks continued to perform well for the month, extending their positive January results and maintaining their year-to-date advantage over domestic stocks.
  • Bond markets have experienced greater volatility this year than they saw for the majority of 2014, while equity market volatility ebbed in February as stocks rallied.
  • Most fixed-income indices lost ground in February, as yields trended higher. However, this shifting environment was good for bond managers who were in position to take advantage of the rising rates.
  • Core U.S. economic indicators remained largely positive in February; a slight revision downwards in fourth-quarter GDP was largely driven by inventory details.

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Q4 GDP Research Notes

March 27, 2015

Q4 GDP estimate unchanged at 2.2% Today’s GDP report confirmed the economy grew at a 2.2% annualized pace in the fourth quarter, unchanged from the prior estimate. For the year, the U.S. economy grew at a 2.4%. This revised data confirms that growth softened late last year on the heels of growth in excess of […]

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February’s CPI Research Notes

March 24, 2015

CPI unchanged over past 12 months; oil prices stabilize in February As anticipated, the Consumer Price Index rose 0.2% in February, as energy prices stabilized during the month after an extended period of monthly declines. For the last year, the CPI edged out of negative territory and was effectively unchanged. Core inflation, which eliminates volatile […]

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Jobless Claims (week of 3.14.15) Research Notes

March 20, 2015

Jobless claims hold steady Initial jobless claims were virtually unchanged at 291,000 for the week ended March 14, slightly higher than the previous week’s revised print of 290,000. The four-week average also edged higher to 304,750. Jobless claims have been hovering near the 300,000 mark for the last few months, as job creation has been […]

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Consumer Sentiment Research Notes

March 13, 2015

Consumer sentiment falls for second consecutive month The University of Michigan Consumer Sentiment Index fell in March to a four-month low, coming in at 91.2, easily missing the consensus expectation of 95.5. The decline reflected a dip in consumers’ assessment of current conditions, but also a decline in future expectations for the economy.  The drop […]

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February’s Employment Situation Research Notes

March 6, 2015

Jobless rate drops to 5.5%; job creation remains brisk Job market conditions remained strong in February as the economy created 295,000 jobs during the month, a result that was stronger than anticipated.  While a moderate downward revision of 18,000 for January should be factored into the analysis, the net number is still strong.  Additionally, the […]

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Q4 GDP Research Notes

March 2, 2015

Consumption picks up, but GDP growth slowed to 2.2% in Q4 The economy grew at a 2.2% annualized pace in the final quarter of 2014 according to new data released this morning, a moderate – but not unexpected – decline from the prior estimate of 2.6%.  Despite the downward adjustment to the data, estimated growth […]

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January’s CPI Research Notes

February 26, 2015

Headline CPI falls below zero on collapsing energy prices The first estimate for January Headline CPI suggests the index fell by 0.7%, bringing the year-over-year change in prices to a decline of 0.1%.  Economists expected a drop of 0.6% for the month according to the Bloomberg survey. Core inflation, which eliminates volatile food and energy […]

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Market Perspectives (February 2015)

February 26, 2015

Executive Summary January was a challenging month for domestic equities, with all major indices losing ground. Mid caps fared the best of the group, while small caps experienced the biggest decline. International equities markets moved higher last month, encouraged by moves from the European Central Bank (ECB) and the Bank of Japan (BOJ) to expand […]

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