Consumer Confidence Inching Back to Normal

It’s been a few months since we visited the subject of consumer confidence, so let’s update our interactive chart again. You can drag the time sliders below the chart to view data going all the way back to 1998.

At 56.6, the Present Situation Index has gained 180% from its December 2009 low point, but still sits well below 100. The index is now just 5% below the pre-crash low point of 59.7 in September 2003, and sits between levels seen on the way down in September and October 2008. Meanwhile, as expectations for the future continue to climb, they have hit 85.1 as of November.

No big surprises in this data. The slog continues, with slow but steady improvement most months.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

21 comments:

  1. 1
    softwarengineer says:

    Current/Sluggiish 2012 Holiday Sales and Consumer Confidence Aren’t Related?

    “…Antonette so far has spent about half of what he planned to spend during this holiday season on gifts such as Legos, a Wii U game console and Apple’s iPad Mini tablet computer for his two young children. Antonette stopped shopping after spending $1,000 over fears that Congress and the White House won’t reach a budget deal by January. A stalemate would trigger tax increases and spending cuts known as the “fiscal cliff.”

    “I basically stopped moving forward in buying,” said Antonette, 44, who runs a small public relations business and worries that he might not be able to take mortgage deductions on his house next year. “I feel like we’re in financial limbo.”

    http://www.theledger.com/article/20121214/news/121219552&tc=yahoo

    “…

  2. 2
    blurtman says:

    The crowd chants for more, “Bubble, bubble, bubble,…” as President Obama signs a new law banning all accountability in the USA. “Let’s just move forward.” said the President. “Holding people responsibile only impedes progress.” said the President.

  3. 3
    Pegasus says:

    The Present Situation Index is less than 50 percent of it’s numbers in 2007 when it was 140 instead of 56. Once again it appears the writer is looking for ponies when he should recognize that he is really looking in a deep pile of sheet.

  4. 4
    whatsmyname says:

    RE: Pegasus @ 3 – Go back to July of 2000, and it was 186.5. Still, trend up better than trend down, Mongo.

  5. 5
    Pegasus says:

    RE: whatsmyname @ 4 – Mongo only pawn… in game of life. Maybe if we look at only the median while excluding any detractors it will appear to be much better? Say….I think i see a pony’s tail!

  6. 6
    whatsmyname says:

    By Pegasus @ 5:

    RE: whatsmyname @ 4 – Maybe if we look at only the median while excluding any detractors it will appear to be much better? Say….I think i see a pony’s tail!

    I’m glad you brought that up because I missed the conversation last time. Disaggregating the median only provides more information. The reason we started to use the median is because it provides more information than the average. What could be wrong with having better information?

    It is useful for the non-distressed seller and the buyer of non-distressed property to have a better feel for what is realistic in their submarket.

    Meanwhile, the implication of the higher resiliency in the non-distressed market should tell the seller or buyer of distressed property that the median decline is actually understated for him.

  7. 7
    Shoeguy says:

    RE: softwarengineer @ 1

    She stopped shopping after charging $1,000 of needless crap on her credit card, dog piling the ten thousand she probably has already sitting there from the Christmas before and the Christmas before that.

    Welcome to the echo bubble! I’m sure this time it’s different!

  8. 8

    By whatsmyname @ 6:

    By Pegasus @ 5:

    RE: whatsmyname @ 4 – Maybe if we look at only the median while excluding any detractors it will appear to be much better? Say….I think i see a pony’s tail!

    I’m glad you brought that up because I missed the conversation last time. Disaggregating the median only provides more information. The reason we started to use the median is because it provides more information than the average. What could be wrong with having better information?

    Pegasus only likes information if it tells a certain story. Breaking out the numbers produces some numbers that are higher than other numbers, and Pegasus only likes lower numbers.

    If you’re selling a short sale property, you price based on other short sale comps. If you’re selling a non-distressed property, you price based off of other non-distressed comps (unless you want to leave thousands of dollars on the table, or create a bidding war). So why not also look at the different medians for the different groups? In addition to giving you some indication how good or bad the non-distressed market is doing, it also gives you a very good indication of how poor a job the banks are doing approving short sales and selling REOs.

    More than anything though, without breaking out the numbers the seasonality becomes very obvious. The median will drop significantly in the winter only because banks will continue to process REOs and short sales at the same numbers, while non-distressed drop off in volume. That alone is a good enough reason to look at the non-distressed median.

    To use an automobile analogy, if you go to the Kelly Blue Book site (KBB.com) they will give you different prices if you’re buying from a private party, from a dealer or a certified pre-owned. Pegasus probably hates that! Too much information, and some of the numbers are higher than others!

  9. 9
    The Tim says:

    By Pegasus @ 3:

    The Present Situation Index is less than 50 percent of it’s numbers in 2007 when it was 140 instead of 56. Once again it appears the writer is looking for ponies when he should recognize that he is really looking in a deep pile of sheet.

    How exactly is my assertion that confidence is “inching back to normal” evidence that I am “looking for ponies”? Do you deny that the Consumer Confidence Index is slowly increasing? Because I’m not sure how you are interpreting words like “inching” and “slog” as being somehow overly optimistic.

  10. 10

    By whatsmyname @ 4:

    RE: Pegasus @ 3 – Go back to July of 2000, and it was 186.5. Still, trend up better than trend down, Mongo.

    Yes up is better than down, but I wonder if it has to be up at a greater rate to mean anything?

    If you’ve spent 5 years in jail, things probably seem better than they did your first year, just because you’re used to living in a crappy situation. They might seem better, but that doesn’t mean things are better.

  11. 11
  12. 12
    corndogs says:

    RE: whatsmyname @ 6 – “Disaggregating the median only provides more information”. Pegasux isn’t looking for more information. He’s looking for validation that the world is ending. He’s just another primordial rodent destined for extinction because he didn’t have the courage to scurry out of his dung hole and score a crumb when the time was right..

  13. 13

    That consumers and homebuilders have confidence only means that they have confidence. They are not necessarily accurate predictors of the future, right?. Local home builders were building like crazy right up until the crash. Consumers were buying all kinds of crap they didn’t need right up until the time they got their layoff notices.
    Maybe their confidence is justified, maybe it isn’t. Am I missing something about what this is supposed to indicate?

  14. 14
    David Losh says:

    RE: The Tim @ 9

    Because the Consumer Confidence reports have been tied lately to consumer debt.

    Personal debt is neck, and neck with government debt. This shopping season also saw a rise in consumer debt http://www.huffingtonpost.com/2012/12/07/us-consumer-debt-record_n_2260457.html

    The consumers may be confident, but they are losing the where with all to follow through with purchasing power.

    As much as Americans are deleveraging through actions like foreclosure, they are adding unsecured debt.

  15. 15

    By Ira Sacharoff @ 13:

    That consumers and homebuilders have confidence only means that they have confidence. They are not necessarily accurate predictors of the future, right?.

    Ignoring the fact that nothing is an accurate prediction of the future, I believe both of these would be considered lagging indicators by most people.

  16. 16
    Tim McB says:

    RE: Kary L. Krismer @ 8

    Your right about the comps Kary. We’re going through a refinance and had the appraiser by last week. I found out a wealth of info from him on RE valuation, including that as a general rule short sales are stripped out from being used as comps. Only non-distressed sales are used.

  17. 17

    RE: Tim McB @ 16 – It varies by appraiser, but in general I agree with the approach your appraiser took, unless your market is saturated with short sales/REOs. As I mentioned in another thread, I saw an appraisal earlier this year where two of the comps were short sales on a Newcastle property. There are very few short sales in that area.

  18. 18
    corndogs says:

    RE: David Losh @ 14 -Losh says… “As much as Americans are deleveraging through actions like foreclosure, they are adding unsecured debt……The consumers may be confident, but they are losing the where with all to follow through with purchasing power”

    Wrong! Consumer spending continues steady and modestly increasing for the last 3 years.

    Almost all types of debt have decreased except for student loans (which have increased by about 300B since 2008). Home mortgage balances have decrease by about $1 Trillion!! since 2008. Even your article states that credit card debt is 17% less than it was in 2008.

    Regarding student loans – If you had a student loan, would you pay it off when there is a remote chance that Barry O will wipe it clean somehow?… An increase in this one type of loan type, does not lead to the conclusion “that consumers are losing the ‘where with all’ to follow through with purchasing power”. Once again you’ve drawn a conclusion based on your own misunderstanding of what you read on the internet.

    US savings deposits at 6.5 Trillion are higher today than they have ever been. The money is there, the purchasing power is increasing. Consumer spending is increasing. A one month glitch related to Hurricane Sandy is not worth mentioning.

    You are wrong!

  19. 19

    RE: corndogs @ 18 – I really doubt that student loans are increasing out of hope they will become dischargeable in bankruptcy. At best it would likely go back to the old rule which required extreme hardship.

    I suspect they are increasing mainly because tuition has gone up so much (a truly vicious cycle) and because the repayment terms are relatively favorable.

  20. 20
    corndogs says:

    RE: Kary L. Krismer @ 19 – Those are obvious factors, that I know well, since I just paid for 3 students out of my pocket. Bottom line is, there is very little reason in the short term to pay a student loan. Maintaining a large student loan balance doesn’t logically follow toward a loss of wherewithal to purchase other things. I know married couples making $300K a year still paying on those loans.

    There are other factors such as write-offs once you become employed by the government, in some cases…. this is part of a recent Democrat agenda for attracting certain students to government employment… All the uncertainty has been enough for me to let a few loans accumulate, the terms are good, why not see what happens? In my case, the balances are definitely there because I’m waiting to see what the current administration might do. Also, maybe my child will accept some government job that will pay the loans. In retrospect, I probably shouldn’t have paid down any of the loans. I think there are a lot of people who think there may be a benefit in waiting.

  21. 21
    Mindy the cat says:

    Well that certainly flushed out the loons. But I hear the world ends tomorrow!

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