Consumers Getting More Confident

One important economic indicator continues to improve: consumer confidence. According to the Conference Board, the consumer confidence index increased further in January, from 53.6 in December to 55.9. Its Present Situation and Expectations indices increased too. How much does this data matter? A lot.

First, here's probably the most hilarious chart I've ever seen, from the Conference Board's press release:

confidence 2010-01.gif

I didn't include that to be so much informational as amusing. The Conference Board doesn't give you much without a $2,500 subscription, which, sadly, I do not have. But luckily, I can rely on the analysis of those who do, like Marketwatch:

The consumer confidence index rose to 55.9 in January from an upwardly revised 53.6 in December. It's the highest reading since September 2008, when the financial crisis intensified. It was the third straight increase.

The index came in better than expected by economists surveyed by MarketWatch, who were looking for an increase to 53.5 from the previously reported December level of 52.9. Read our complete economic calendar and consensus forecast.

That first paragraph says something really significant. U.S. consumers are feeling the best about the economy that they have since the financial crisis. This is an important trend. A recovery can't take hold until consumers begin to get out of the psychological doldrums that recession creates.

This indicates that spending may finally begin returning to more normal levels, which could spur demand and firms to begin hiring. At least, that's the hope.