Americans feel more confident, but should they?
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The U.S. stock market struggled again this month while Europe careened toward a financial meltdown, but many Americans don’t seem to be paying attention to either: Consumer confidence snapped back in November to the highest level since July.
The Conference Board said its confidence index jumped to 56.0 after slumping to 40.9 in October, which was the lowest level since the depths of the recession in early 2009.
A reading of 56.0 still is very depressed, and is down from the 2011 high of 72.0 reached in February. A typical reading in the mid-2000s was between 100 and 110.
Nonetheless, any increase in confidence is a good thing. And the board’s report showed that confidence rose this month among all income groups, so it wasn’t just the well-heeled who turned more upbeat.
But should people really be feeling better about things?
Maybe it’s just a coincidence, but many of the U.S. economic reports over the last month have shown improvement, further belying the idea that the economy was at risk of sliding back into recession.
Eighteen of 24 reports measuring economic output, employment and the housing sector were better this month than the previous readings, according to data firm Bespoke Investment Group. That’s a pretty good batting average.
Another way to gauge the economic reports is to look at whether the data came in above or below analysts’ expectations. Over the last 50 trading days, the number of better-than-expected reports has exceeded worse-than-expected reports by 13, according to Bespoke.
That is “the highest level since April, and represents an environment where economists have been underestimating U.S. economic growth amid all the global issues,” Bespoke said in a report.
Some important data are due later this week: The Institute for Supply Management’s report on November manufacturing activity is coming on Thursday. On Friday the government will report on November employment.
With the U.S. economy showing remarkable resilience by many measures, you have to wonder: Would the stock market be a lot higher if it weren’t for Europe’s unrelenting crisis?
The average New York Stock Exchange issue is down 5.5% so far this month and down 10.2% this year. With a month of trading to go, it would take a gain of 11.5% from this point to put the NYSE index in the black for 2011.
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-- Tom Petruno