Maybe I’m just having a bad day. It is awfully dreary in Pittsburgh today. Under normal circumstances I would be cheering today’s consumer confidence number. Coming in at 56.0, confidence is up 37% in the past month, 32% higher than expectations, and (in my opinion) entirely inexplicable.
To say I’m dubious would be an understatement. But, before diving in and blogging, I took the time to step back, discuss the number with my partners, and try to find a reason for the new-found consumer giddiness. Maybe people are feeling more confident because the value of their homes has stabilized. Nope.The Standard & Poor’s/Case-Shiller index released today showed prices dropped in September from August in all but 3 of the 20 cities tracked. Perhaps unemployment is improving. Nope. Unemployment still has a 9-handle. Maybe there is a wealth effect from a strong stock market. Nope. Month-to-date the S&P 500 is down nearly 5%. Maybe the European crisis has finally been resolved. Nope. We’ve got additional nebulous gesturing from Europe, but no permanent solution. How about oil? Is the price dropping? Nope. Oil continues to nip at the $100/barrel level.
Which leads me to one of two conclusions… Either the numbers are inaccurate (believing which would make me a conspiracy theorist), or those being polled are pixelated.
Could it be that the Holiday spirit (and its accompanying $2 waffle irons, pepper spray, and 70″ flat screen TV’s) has lifted the collective consumer mood so dramatically? It’s certainly possible. Based on the record-breaking Black Friday retail numbers, marketers have been effective in conning the general public into believing they need more electronics, waffle irons and expensive underwear. After all, who doesn’t want to control their new TV with an IPad app, dressed like Gisele Bündchen while making breakfast. Creating that kind of euphoria would, most likely, spread to other aspects of the psyche. Consider it con job contagion.
Me… I’m not buying it. A 4 standard deviation shift in confidence is just not believable. Statistically, it’s darn near impossible. It’s certainly not worth a shift in investment posture.