Alright contestants, it's time to play The Confidence Game, where you can match wits with "a representative sample of 5,000 US households" who participated in the Conference Board's most recent monthly survey of consumer confidence.
Stumper #1. Since 1978, the Conference Board survey has been asking participants if they plan to take a vacation within the next six months. How often has the percentage answering "yes" been lower than this month?
Answer: Twice. Just 35.3% of respondents plan to take a vacation in the next six months. The only lower positive response rate was in April 2009 when 34.6% answered "yes". The long-term average is 45.9%, but the percentage of "yes" answers has been below 40% since February 2008.
Stumper #2: Another survey question is, "Do you plan to buy a home in the next six months?" Since 1982, when the US was in a deep recession and mortgage rates were 14%, how often have fewer than 2% of participants answered "yes"?
Answer: Twice. In June, a mere 1.9% of households said they planned to buy a home soon. This was barely above the 1.7% positive response rate recorded last December, which in turn, was the lowest reading since September 1982. This question has been included in the monthly survey since 1964, and the average positive response rate is 3.29%.
Stumper #3: The Conference Board asks households if they plan to buy a car in the next six months. How many times, since the Board began asking this question in 1967, has the percentage of respondents answering "yes" been lower than this month?
Answer: Never. This month, 3.7% of households said they planned to buy a car, new or used, in the next six months. In 43 years of asking, this was the smallest percentage answering "yes." It's barely half the long-term average of 7.35%.
The deep pessimism expressed in Conference Board's survey is no joke. It should be a wake-up call for policy makers. Consumer confidence typically rises and falls with the stock market. Improving confidence in the winter and spring were more a reflection of stock prices than real economic conditions. Reality, in the form of continuing high unemployment and a moribund housing market, is now reasserting itself, both on Wall Street and Main Street. Under the circumstances, the worst possible course would be to choke off stimulus and impose federal spending cuts, but that's exactly where Congress appears to be heading.
Note: The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world's leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. Founded in 1916, the Conference Board is an objective, independent source of economic and business knowledge with one agenda: to help our member companies understand and deal with the most critical issues of our time. We conduct research and convene business leaders in forums large and small, public and private. The insights captured through our extensive network feed directly back into our research and meeting agendas, ensuring that our activities remain sharply focused on the key issues of the day. (from The Confidence Board's website)