CONSUMER CONFIDENCE RISES

Today there was an excellent and strong rise in consumer confidence.

The Conference Board says that consumer confidence rose from 53.3 in December to 60.6 in January.  This is the highest reading since May 2010 when the stupid Wall Street “flash crash” followed quickly by those idiot liars and their debt crisis, the Greeks, tanked consumer confidence.  It has been a long road back.

Analysis: Back in May 2010 I said that folks should be buying U.S. equities because the fundamentals of the U.S. economy were solidifying even despite the sinking consumer confidence.  Why did I say this?  Because you and I, we, are lagging indicators.  Things have to be rock solid before the average consumer will fess up to feeling confident.

Consumer confidence is rated on a scale from 1 to 100.  A reading of 50 or less indicates that consumers feel the gross domestic product (GDP) is going to get worse.  Anything better than that means that consumers feel the economy is getting better.  So a surge of 13.7% in the measure is a strong indication of confidence in the economy.

Barring any unforeseen retardation on the part of Wall Street – another event like the “flash crash” – or unforeseen retardation on the part of a sovereign nation – Greece – then 2011 is finally going to be the first year in many that actually feels like a normal year, in terms of GDP growth.  Hallelujah!  That’s because the economy has strengthened to such a degree that we laggards now feel confident again.

Importance grade: 10; this is some of the best economic news in many months.  Importantly, unlike the last time consumer confidence was so high, there are not many unresolved issues on the horizon (e.g. a Euro debt crisis); ergo, no surprises.

Jason