Consumer confidence continues to surge! The Conference Board published the latest read on consumer confidence, which climbed to its highest level since 2000 reaching 130.8 from 124.3 in the preceding month.  According to Moody’s (Conference Board parent company):

First Take

Consumer confidence jumped in February, improving by 6.5 points, its strongest one-month gain in almost a year. Confidence now sits at 130.8, reaching a post-2000 high. This month’s report showed solid improvement in present situations and in economic expectations. Consumers were more pleased with the job market, and businesses reported good business conditions. Labor, income and business expectations followed suit. Purchase plans recovered somewhat, with home buying and appliance purchasing plans rebounding. However auto purchasing plans reverted to their lowest level since September. Inflation expectations rose by 0.1 point, with 12-month inflation expected to average 4.7%.

Key changes on Jobs

• Consumers’ outlook for the job market was more positive
• Portion expecting more jobs in the months ahead increased from 18.7% to 21.6%
• Those anticipating fewer jobs declined from 12.5% to 11.9%
• Regarding their short-term income prospects, the percentage of consumers expecting an improvement increased from 20.6% to 23.8%, while the portion expecting a decrease rose, from 7.9% to 8.6%

Consumer Confidence

The Present Situation index increased from 154.7 to 162.4, while the Expectations index increased from 104.0 to 109.7. Consumers are feeling more upbeat about current conditions, led by their attitudes pertaining to business and labor market conditions.  Increased confidence is spilling over into increased discretionary spending as can be seen in Macy’s earnings out this morning.  Macy’s mentioned the improving level of optimism from consumers as a driver behind the company’s results. 

Also, on the economic front, Durable goods orders declined 3.7% in January following a downwardly revised 2.6% increase (from 2.9%) in December.  Excluding transportation, orders fell 0.3% after increasing an upwardly revised 0.7% (from 0.6%) in December.  

• Transportation equipment orders dropped 10%, led by a 28.4% decline in orders for non-defense aircraft and parts and a 45.6% decline in orders for defense aircraft and parts
• Motor vehicle and parts orders were up 0.1%  
• Machinery orders were down 0.4% after increasing 0.5% in December 

The report suggests that there wasn't a lot of carryover order momentum from December and first quarter activity is proceeding at a slower pace.

Meanwhile, the Powell testimony has largely been a farce with lawmakers hijacking the process to teach Powell economics and get him to agree there is racism in lending and some groups have higher unemployment rates than others.   Now that the event has concluded, we’ll see how the market reacts going into the close. 

There was a noticeable answer on how the economy grows through either more people working or businesses being more productive.  In the morning Hotline, I will cover that in greater detail.