CONSUMER CONFIDENCE AT 15 YEAR HIGH
We have a matching downward trend in both Consumer Confidence Regression and the GDP Regression over the last 40 years.
The Head and Shoulders pattern is reflective of a topping pattern as the public is losing confidence in the "American Dream" and economic future.
Previous highs in Consumer Confidence "hope" were found to be misplaced and were precursors to major market draw-downs!
The Conference Board Consumer Confidence Index was released this morning based on data collected through February 16. The headline number of 114.8 was an increase from the final reading of 111.6 for January, a downward revision from 111.8. Today's number was above the Investing.com consensus of 111.0.
Here is an excerpt from the Conference Board press release.
"Consumer confidence increased in February and remains at a 15-year high (July 2001, 116.3)," said Lynn Franco, Director of Economic Indicators at The Conference Board. "Consumers rated current business and labor market conditions more favorably this month than in January. Expectations improved regarding the short-term outlook for business, and to a lesser degree jobs and income prospects. Overall, consumers expect the economy to continue expanding in the months ahead."
Putting the Latest Number in Context
The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.
On a percentile basis, the latest reading is at the 85th percentile of all the monthly data points since June 1977, up from the 82nd percentile the previous month.