Wednesday, April 28, 2010

US consumer Index, Mirror of economy???

The US consumer confidence published by the University of Michigan can tell us a lot of things, even though they do not necessary equal to willingness to open their wallets, predicting the US consumer spending.

I came across this chart published by Bespoke folks. They spotted the US consumer confidence index has been rising and recovering to pre-Lehman level. The number of 57 is kind of like a magic number because it will continue to rise after clearing this hurdle. I have no scientific explanation to this except it tends to have this statistical bias.

Whether it will continue to rise and bring about continued spending is not really concerning me. The thing that I will pay attention is whenever there is an exceptionally high level of optimisms. Whenever it hit the 90 - 110 level, there is a high correlation that a recession will follow.

Those of you who have been following me for a while(I think many of you are) will understand that my big picture outlook remains unchanged but short term financial markets corrections that I highlighted on April 16, is getting louder.

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