Consumer Confidence in October 2014

The consumer confidence index as reported by the Conference Board bounced back in October and the dismal September results were revised upwards. The composite rose from 89.0 (first reported as 86.0) to 94.9, the view of the present situation rose from 93.0 (first reported as 89.4) to 93.7 as expectations rose from 86.4 (first reported as 83.7) to 95.0. Which just goes to prove that first estimates should be treated with caution and that a three month moving average, (3MMA) is a much better guide to a true situation. On closer examination it looks as though the September view of expectations was an outlier. After revision the September view of the present situation came back in line. The 3MMA of the composite, the view of the present situation and expectations are shown in Figure 1. The present situation component has been much more volatile that expectations since our data began 34 years ago. History suggests that we are now entering a period when the view of the present situation will move ahead of expectations.