US Consumer Confidence Lowest Since Nov 2009, France 8 Month Low, South Korea 23 Month Low, UK Record Low; Icing on Three Little PIIGS' Cake

In the wake of falling US consumer confidence, let's take a look at global consumer confidence headlines starting with the US.

US Consumer Confidence Lowest Since November 2009

Bloomberg reports U.S. Consumer Sentiment Fell More Than Forecast in March

The Thomson Reuters/University of Michigan final index of consumer sentiment decreased to 67.5, the lowest level since November 2009, from 77.5 in February, the group said today. The median forecast of 67 economists surveyed by Bloomberg News projected a reading of 68.

Gasoline prices hovering near the highest levels since October 2008 are straining the finances of American households, whose spending makes up about 70 percent of the world’s largest economy. While unemployment has fallen for three months, Japan’s earthquake crisis led to a plunge in stock values, at one point wiping out all of 2011’s gains.

The decline in sentiment was foreshadowed by other gauges. The Bloomberg Consumer Comfort Index dropped last week to the lowest level since August as consumers’ assessment of the economy dimmed. The confidence gauge, which tends to inversely track fuel prices, slid to minus 48.9 in the week to March 20 from the prior week’s minus 48.5.

The current conditions gauge, which reflects Americans’ perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, decreased to 82.5 from 86.9 the prior month.

Future Expectations Gauge Plunges

ZeroHedge has a nice chart of Consumer Confidence "Expectations"

The Expectations component had its fifth largest drop in history, plunging from 72 to 58. This is a lower reading than that recorded when the "recession", according to the NBER at least, was still raging. As a reminder the recession ended with "expectations" at 70.

Consumer Expectations Index at 57.9



South Korean Consumer Confidence Drops to 23-Month Low

Please consider South Korean Consumer Confidence Drops to 23-Month Low After Japan Quake

South Korean consumer confidence fell to the lowest level in almost two years, damped by Japan’s strongest earthquake and political unrest in the Middle East. Retailers’ stocks dropped in Seoul trading.

The sentiment index declined to 98 in March from 105 in February, the fourth monthly drop, the Bank of Korea said in an e-mailed statement in Seoul today. A number below 100 indicates pessimists outnumber optimists.

“Consumer confidence worsened so sharply, boding ill for private consumption and also economic growth,” said Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul. “If oil prices stay above $100 a barrel for another month, sentiment will deteriorate further, prompting the central bank to pause interest-rate increases next month.”

The Bank of Korea raised rates for the second time this year on March 10 after inflation exceeded its target ceiling for two consecutive months. The benchmark seven-day repurchase rate now stands at 3 percent. Consumer prices climbed 4.5 percent last month.

U.K. Consumer Confidence at Record Low

Are things so bad in the UK they cannot get worse? Somehow I doubt that. Meanwhile please ponder U.K. Consumer Confidence at Record Low on Economic Worries

U.K. consumer confidence fell to a record low in February as Britons grew more pessimistic about the sustainability of the economic recovery and the outlook for jobs, Nationwide Building Society said.

An index of sentiment dropped 10 points to 38, the lowest since records began in 2004, the customer-owned lender said in an e-mailed report today. A measure of whether now is a good time to spend dropped 18 points to 52, also the lowest since the survey began.

The U.K. economy shrank in the fourth quarter, while inflation has soared to twice the Bank of England’s 2 percent target. Bank of England policy makers have split four ways as they debate whether to focus on boosting the recovery or curbing price pressures, and voted on March 10 to keep the benchmark interest rate at a record low of 0.5 percent.

“The labor market remains fragile” and “inflation is showing few signs of easing,” Gardner said. Oil prices have risen 37 percent in the last six months and U.K. unemployment rose by 27,000 in the three months through January to 2.53 million, the highest since 1994.

A gauge of consumers’ future expectations fell 14 points to 50 and an index of their view of the present situation slipped 3 points to 20, the lowest in 18 months, the report showed.

“High inflation has led many to expect interest rate rises by the summer, which may in turn have fanned concerns about mounting pressure on household budgets,” Gardner said. He sees rates on hold “until the back end of 2011.”

EU Consumer Confidence drops to -10.6

FXStreet reports EU Consumer Confidence drops to -10.6 in March

The EU consumer confidence index worsened slightly to -10.6 in March, compared to the revised -10.0 it recorded the month prior and the -11.0 which was expected.

French Consumer Confidence at 8-Month Low

Bloomberg reports French Consumer Confidence Declines on Higher Energy Prices

French consumer confidence fell to an eight-month low in March as surging energy costs sapped spending power and President Nicolas Sarkozy readied a new wealth tax.

An index of sentiment fell to 83 from 85 in February, national statistics office Insee said today in an e-mailed statement. That was the lowest reading since July.

With oil prices up more than 40 percent in a year, French motorists are paying more for gasoline while the government is planning electricity-price increases for later this year. That’s slashing spending power at a time when joblessness remains stuck near a seven-year high.

Sarkozy’s government is preparing an overhaul of a tax on the nation’s wealthiest households and the anti-immigration National Front is surging in opinion polls.

Look on the Bright Side

Being the ever-optimist, I like to look on the bright side. Please consider German consumer confidence rises on wage hopes.

German consumer confidence is rising as workers expect wages to increase in 2011, according to a survey by market research group GfK.

GfK said its forward-looking index for March had risen to 6.0 from a revised 5.8 in February.

The group also said that falling unemployment was giving consumers a greater feeling of security.

Such is the nature of the ECB's "One Size Fits Germany" Interest Rate Policy.

Icing on the Three Little PIIGS' Cake

We all know there's nothing quite like a mix of income tax tax hikes, high gasoline prices, rising food prices, and 7-year high jobless rates to boost consumer confidence.

Interest rates hike by the ECB will be icing on the three little PIIGS' cake.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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