Tuesday, June 2, 2009

The "Other" Consumer Index Posts Major Market Divergence

Everyone, and Bernanke especially, knows that the highly objective UMich CONsumer CONfidence index is a wonderful leading and lagging indicator to the market, which is why lately it has been getting the rose colored glasses treatment. Curiously, the other consumer index, the ABC Consumer Index staged a major trend reversal this week with the one thing it should be mostly fond of - the market. While the market has kept on going higher as more retail investors look at the Con Con and figure all is hot, the weekly ABC index begs to differ. Here is the description of the index:
Declining levels of consumer comfort usually accompany any fall in income and wages and precede drops in consumer spending. A low or falling ABC Consumer Comfort value is considered an early indicator of an economic downturn. As a result, investors, retailers and traders alike all watch the figure for insight into the general health of the economy.

Note: The index incorporates the most recent week's data with the results of the past three weeks, yielding a rolling four week average. Results are calculated as the difference in percent of positive and negative numbers.

Is the confidence game starting to crack?

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