Consumer Sentiment Highest Since Pandemic Began
today at 1:32 pm
The current stock market levels are very misleading, as the indices are all artificially inflated by Federal government intervention. Eventually reality will set in, and we’ll all come down to Earth, but there is still some reason to be bullish going forward.
One reason is that the University of Michigan Consumer Sentiment Index, formerly known as the consumer confidence index, is now at its highest level since the coronavirus pandemic broke out and hamstrung the economy. Apparently, the consumer market in the world’s richest country is feeling better right now about the state of things that at any previous point during COVID.
And that could mean American consumers now have more disposable income available for entertainment spending, such as playing real money pokies at online casinos, wagering with daily fantasy sports or the now legalized betting on NFL and college football. While much of the American economy has re-opened, the entertainment and travel sectors remain largely shut down.
That disposable income which would be funneled into these industries is being saved/spent in other areas. As we profiled before, the entertainment economy, pretty much anything you can call an “event” or something you need to buy a ticket to, is down on the canvas for awhile yet.
The University of Michigan (so #GoBlue and “those who stay will remain champions”) consumer sentiment level rose to a 6 month high in its last report, hitting 78.9, up from 74.1, but still a far cry from pre-pandemic levels. It was 22 points highers before COVID hit, and historically, a number around 100 is far more the norm. Still, this might be the most exciting to happen with his metric since satirical news outlet The Onion posted a brief article Consumer Confidence Verging on Cockiness, a couple decades ago.
Consumer Confidence/Sentiment is just one of several metrics for taking a good temperature of the economy at any given moment. There is also the Beige Book, which the Federal Reserve publishes eight times a year, in advance of Federal Open Market Committee.
Each report gathers “anecdotal information on current economic conditions” by each Federal Reserve Bank in its district from “Bank and Branch directors and interviews with key business contacts, economists, market experts, and others.”
There is also the PPI (Producer Price Index), which is a group of indices that calculates and represents the average movement in selling prices from domestic production over time. It’s researched, calculated and published by the Bureau of Labor Statistics.
Finally, you have jobless claims, an oft-quoted and largely mis-represented and misunderstood metric. No matter what much of the media tells you, these numbers are not the unemployment rate much like the stock market is not the economy. It’s simply people who filed for unemployment benefits that week.
It is not people who are unemployed, but didn’t file and it is not a measure including those who are jobless, but don’t qualify for benefits, nor those who are unemployed and have seen their benefits reach completion.
Paul M. Banks runs The Sports Bank, partnered with News Now. Banks, the author of “No, I Can’t Get You Free Tickets: Lessons Learned From a Life in the Sports Media Industry,” has regularly appeared in WGN, Sports Illustrated, Chicago Tribune and SB Nation. Follow him on Twitter and Instagram.
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