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Strategies & Market Trends : Guidance and Visibility -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (506)	6/21/2001 3:05:46 PM
From: $Mogul	Respond to of 208838

ECONOMY TALK: The ABC/Money magazine weekly confidence survey rose further from a 3-year low last week as perceptions about the general economy and personal finances improved. Importantly, the personal finance component of the ABC survey remained at high levels compared to that of perceptions about the general economy. This is important because studies by the Fed have found that consumers' assessments about their personal finances is a better predictor of future spending than overall confidence. This makes sense because a consumer's personal situation likely has a far greater bearing on their actual spending than their assessments of the overall economy. In the latest week, the ABC/Money confidence survey rose to +4 from +3 the previous week and a recent low of +1. In recent months the index had posted large declines but the reason for the decline relates almost entirely to consumers' perceptions about the general economy; the index of sentiment on the national economy has fallen from +42 at the start of the year to +2 currently but the personal finance component has hardly budged, falling from +32 to +24. Over the past year, ABC's index on the national economy has fallen from +54 but the index on personal finances is flat from year ago levels. It is notable that the decline in consumer confidence is mostly due to perceptions about the economy rather than personal finances. This perception is no doubt being shaped by repeated media focus on the current weakness in the economy. Given the proliferation of media in the current Internet era, it can be argued that perceptions about the economy can be more readily shaped now than at any time in history. But if the Fed's rate cuts eventually buoy the markets, perceptions about the economy might quickly shift and consumer spending might soon follow, as consumers already perceive themselves to have the wherewithal to spend; they just need a shot in the arm. The recent drop in energy prices will almost certainly gives consumers a boost as will upcoming tax cuts and the Fed's interest rate cuts