Financial Week in Preview: US Consumer Confidence is Rising

Financial Week in Preview: US Consumer Confidence is Rising

Tuesday June 24th, US consumer confidence expected to rise (to 83.5 from 83)

Although confidence is expected to pick up, it should come as no surprise that US consumers are still less chirpy than they were before the crash of 2008 (see below).

With real incomes having remained stagnant as wage increases struggle to keep pace with inflation, many US consumers undoubtedly feel poorer even if they are able to take on debt to buy goods and take on mortgages once again.

Wednesday June 25th, German import prices

This will be an important barometer in determining if the ECB’s policy of negative rates (and devaluing the Euro) has been successful. Devaluing the Euro and seeing a reversal of the trend declining import prices in Germany will be key to boosting German consumption of Eurozone goods.

Thursday June 26th, US personal income & Personal consumption expenditure index

The story here is that although the rise in US personal income isn’t much to shout about at 0.4 percent on the month, it isn’t forecast to have filtered through to a corresponding gain for consumption expenditure which is only forecast to rise by 0.2 percent.

Friday June 27th, Japanese CPI inflation forecast to rise 2.8 percent

One of the main objectives of Japanese Prime Minister Shinzo Abe upon taking office was to revive Japan’s lagging economy by spurring consumption activity. A key tenant of this has been raising the rate of inflation, which is forecast to rise by 2.8 percent.

This is likely to be artificially high though given that a sales tax hike is being imposed and has led to a front loading of consumption to beat the tax. Inflation is expected to drop back to 1.25 percent going forward from its present peak and forecast 2.8 percent for this month.

Above: Japanese inflation is rising but is expected to fall back to its trend of around 1.25 percent