Consumer Sentiment Research Notes

by Jim Baird on December 9, 2011

Sentiment improves as economic data continues to surprise on the upside

Consumers have been slightly more upbeat in December as numerous economic data points have surprised to the upside, providing some relief.  The index reading of 67.7 was better than anticipated and marked the fourth consecutive month of improvement after its August bottom.

News of improvement in the employment situation and weekly jobless claims, and indications that consumers have been spending a bit more freely in recent months are understandably having a positive impact.  While fewer are seeking unemployment benefits, improvement in the overall unemployment rate can partially be attributed to fewer unemployed seeking out work.

Despite this uptick, sentiment remains well below historical averages as consumers attitude towards the economy has not yet reached levels seen prior to the Great Recession.

While the Eurozone crisis remains a real threat to the global economy, continued actions by policymakers and anticipation of a more aggressive plan to address the crisis has led to marked improvement in the stock market.

While the mood of consumers remains restrained, the recent upward trend is a clear positive.  The hope would be that this nascent improvement in confidence will translate into a greater willingness to spend, creating a need for businesses to hire, and ultimately helping to reinforce a virtuous cycle of improvement for the economy.  

In that regard, there is a long way to go, but incremental improvements over time can add up to meaningful change.

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