July 26, 2011

Advisor, Consumer Confidence Rose in July

A positive short-term outlook led to improvements in confidence indexes

Advisors and consumers alike report feeling more positive about the economy in July. The Advisor Benchmarking’s Advisor Confidence Index increased over 2%, while The Conference Board’s Consumer Confidence Index rose two points from the June index.

Advisor, Consumer Confidence UpThe Advisor Confidence Index rose 2.29%, following an 8% drop in June. Advisor Benchmarking, an affiliate of Rydex|SGI, reported Monday that this is the first gain in the Advisor Confidence Index in six months.

Advisors’ current economic outlook rose 4.17% after falling nearly 15% in June. Looking ahead six months, advisor optimism increased over 5%, while their 12-month outlook increased by a smaller margin of 1.28%. The only outlook that fell in July—which the company noted is the only outlook that increased in June—was advisors’ outlook on the stock market, which fell 1.2%.

The company is cautiously optimistic on the change, though, noting that the increase doesn’t signify a “return to bullishness,” but is a testament to how bearish advisors were in the first half of the year. In fact, comments from advisors who participated in the survey indicated the improvement will be short-lived.

“While the U.S. economic outlook for the short term appears positive, it’s clear that the large budget deficit problem for the medium to longer term needs to be addressed,” Rob Siegmann, chief operating officer and senior advisor for Cincinnati-based Financial Management Group, was quoted in a statement. “In the meantime, there will be plenty of political arguing about how to reduce the budget deficit, and this uncertainty will cause investment decision making to be more challenging in 2012.”

Consumers showed a similar increase in short-term outlook. After falling in June, consumer confidence was up again in July, rising to 59.5, The Conference Board reported Tuesday.

The increase is due to modest improvements in consumers’ short-term outlook. The expectations index rose to 75.4 from 71.6, and consumers outlook for the near future is positive overall, but respondents are pessimistic about the current state of the economy. The present situation index fell to 35.7% in July from 36.6.

Consumers who expect business conditions to improve are at 17.7%, and outnumber those who think conditions will worsen. However, just over 13% of respondents say current business conditions are good, down from June, and 39% say conditions are bad.

More consumers said they expect an increase in jobs (although there was also an increase in consumers who said they expect fewer jobs), although more than 44% said jobs are currently “hard to get.” Nearly 16% of respondents said they expect an increase in their incomes.

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