Consumer Confidence Is Back On The Mend, But Not Soaring

Consumer Confidence Back on the Mend, But Not Yet Soaring Again

It's still a bit soon to say the ongoing improvement in consumer confidence is back in place, but at least it can be said that the developing downtrend in consumer confidence has been quelled.

That's the message delivered by December's consumer confidence score from the Conference Board anyway, which rose from November's reading of 92.6 to 96.5 this month. That's still below the September reading of 102.6, but restores some hope to investors who've been worried consumers are quietly, subtly trying to predict a recession.

One good month does not make a trend, but just for the record, the comparable Michigan Consumer Sentiment Survey has risen for three consecutive months now. It too is still shaking off a sizable pullback that materialized in the third calendar quarter of 2015, but like the Conference Board's measure, at least the weakness has been stopped before it was able to reach alarming levels.

Consumer Sentiment Surveys Chart

Whether the market leads sentiment or sentiment leads the market is debatable, but it's worth noting sentiment stagnated in step with stocks over the course of this year. One or two more progressive months on the confidence front -- even is stocks don't make the exact same move -- does bode well for the long-term market despite the valuation headwinds it will be facing in the coming year.

The primary ETFs that address the US consumer are Consumer Staples (XLP) and Consumer Discretionary (XLY).