How To Profit From The Two Things Consumers Can’t Do Without
Consumer confidence levels for the Thomson Reuters/University of Michigan preliminary index fell from 81.6 in February to 79.9 in March—the lowest level in four months. (Source: Lange, J., “U.S. consumer sentiment slips; bad weather eyed,” Reuters, March 14, 2014.)
Economists had forecast March consumer confidence levels to climb to 82. Instead of celebrating a barely there increase, economists are waxing eloquence on the two-percent decline and two-point gulf between expectations and reality.
In spite of living in North America and having to deal with the cold winter weather that affects most of us, analysts still expected consumer confidence to improve in March…and they seem surprised that it didn’t.
Analysts basically think consumers are too depressed by the weather to shop. This would, of course, bolster their opinion that the U.S. economy is only temporarily stuck and sunnier skies will prevail.
But who can say, really? March’s weak consumer confidence numbers mark the eighth miss in the last 10 months. In all of 2013, consumer confidence numbers beat forecasts only three times.
Maybe the weather can’t take all the blame. In spite of the winter storms, the average U.S. temperature for January was normal, with the warmer West Coast weather offsetting the cooler East Coast weather.
The average was 30.3 degrees Fahrenheit, which is only 1/10 of a degree below normal for the month.
Things weren’t much different in February and consumer confidence levels actually increased to 81.2 from a projected 80.6. (Source: “National US temperature for January normal despite winter storms,” The Guardian, February 13, 2014.)
I think the depressed consumer confidence levels are more connected to weak economic indicators and tensions along the Ukraine/Russia border.
Even though the U.S. unemployment rate has improved over the last year—currently sitting at 6.7%—it comes as a result of an increase in low-wage-paying, part-time retail jobs.
The underemployment rate is still sitting near 13% and the long-term unemployed rate is at 2.3%.