ebook essays pieces of the puzzle
Friday, April 15th, 2011
lack of comfort

There are a variety of measures of consumer sentiment, including the Bloomberg Consumer Comfort Index, produced by Langer Research and shown above.  It is grinding higher, but ever so slowly.

The lower panel shows that total non-farm employment is where it was in mid-2000.  That is certainly wearing on consumers, as is the fact that the most recent drop-off was much more precipitous than those before it and is improving only grudgingly.

But another depressing factor was that each of the last two downturns in the economy was accompanied by a severe retrenchment in the most popular asset class of the day; first stocks and then housing.  The weakness in the latter likely contributed to the decline in the comfort numbers that starts in 2007, well in advance of employment deteriorating.

A number of other political, cultural, and economic factors are likely contributing to downbeat consumer attitudes as well, although your list of the key issues may look quite different than mine.  We’ll leave that discussion for another day.  For now, a multi-part question:  Where do you see this index going over the next few years, why, and what does that mean, if anything, for the markets?  (Chart:  Bloomberg terminal.)