Tuesday, March 26, 2013

Consumer Confidence vs Net_Withdrawals_TGA

Lackluster Consumer Confidence report for March out today from the Conference Board. Story at MarketWatch here.
The consumer confidence index slumped to a reading of 59.7 in March from 68.0 in February. That’s well below the 66.5 expected in a MarketWatch-compiled consensus.
February’s reading also was downwardly revised from an initial 69.7 report. Most of the drop came from a decline in the expectations index, which slumped to 60.9 from 72.4, though the present situation index also fell, to 57.9 from 61.4. The index was the second large drop in three months. That said, retail sales growth has been solid the first two months of the year, posting monthly gains of 0.2% in January and 1.1% in February.
From the Conference Board statement:
“Consumer Confidence fell sharply in March, following February’s uptick. This month’s retreat was driven primarily by a sharp decline in expectations, although consumers were also more pessimistic in their assessment of current conditions. The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident.”
We can examine these confidence readings over the recent past months that are discussed in the article in light of the fiscal data over this same time period in the table below.

TGA Net Withdrawals (Trailing 6 months)
Month Total_Withdrawals_TGA Pub_Debt_Redemption Net_Withdrawals_TGA
oct 933 589 344
nov 1035 643 392
dec 947 651 296
jan 969 643 326
feb 992 549 443
mar (25th) 713 402 311

We can see that the extremely large Net Withdrawals from the TGA in February align perfectly with the anomalous higher confidence readings in this same month. And a precipitous drop-off in December followed up by a generally lackluster January align well with the lower confidence numbers in those months also.

Just a small window of time presented here granted, but this data seems to suggest that confidence increases as the government sector injects higher amounts of $NFA into the non-government so that we can make payments on our liabilities and perhaps even save a little  ... hmmmmmm, who would have thought?

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