Adam G.

York, Economist

adam.york@wachovia.com ● 704-715-9660

April 28, 2009

Consumer Confidence Slowly Returning
Confidence jumped up to 39.2 in April, the highest reading since November. The increase was driven primarily by an outsized gain in expectations—up almost twenty points on the month. The labor differential narrowed for the first time in three months, corroborating the view that the pace of decline in the labor market may be slowing.
Confidence Increases as Expectations Jump
• Confidence moved sharply higher in April, led by the biggest jump in expectations since 2003. Consumers appear to be feeling better about the outlook for the U.S. economy. • While we do not expect consumer spending to come roaring back over the next few months, the worst of the declines may be over. We expect small gains in real consumption will be the norm for the rest of the year.

Labor Market Show Very Tentative Signs of Turning
• The labor differential, the difference between those who find jobs “plentiful” and those who find them “hard to get,” improved for the 1st time in three months and only the 2nd time in more than a year. Still, conditions in the labor market remain tough as only 4.5 percent of consumers reported jobs were plentiful. While we do not expect gains in employment to return until 2010, the worst of the declines may be behind us.

Consumer Confidence Index
160 140 120 100 80 60 40 20 87 89 91 93 95 97 99 01 03 05 07 09 Confidence Yr/Yr % Chg: Apr @ -37.6% Confidence: Apr @ 39.2 12-Month Moving Average: Apr @ 44.3 Conference Board 160 140 120 40% 100 30% 80 20% 60 40 20 10% 60%

Jobs Plentiful vs. Hard to Get
Percent of Consumers, Conference Board Jobs Hard to Get: Apr @ 47.9% Jobs Plentiful: Apr @ 4.5% 50% 50% 60%

40%

30%

20%

10%

0% 87 89 91 93 95 97 99 01 03 05 07 09

0%

Conference Board Consumer Confidence
200 175 150 125 100 75 50 25 0 87 89 91 93 95 97 99 01 03 05 07 09 Expectations Yr/Yr % Chg.: Apr @ -1.1% Present Situation Yr/Yr % Chg.: Apr @ -71.0% Present Situation: Apr @ 23.7 Expectations: Apr @ 49.5 Present Situation and Expectations Index 200 175 150 125 100 100 80 75 50 25 0 60 160 140

Consumer Confidence vs. Layoffs
Conference Board, Initial Jobless Claims, In Thousands 700

600 120 500

400

300 40 20 87 89 91 93 95 97 99 01 03 05 07 09 Confidence: Apr @ 39.2 (Left Axis) Initial Jobless Claims: Apr @ 637.7 Thousand (Right Axis) 200

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