Consumer Confidence and Fed Announcement Convey Optimism About Economy
January 27, 2010 - Consumer confidence hit a 16 month high in January, rising to 55.9 for the month. January's data was the highest reading since September 2008, though the index's numbers have been narrowly changing since last May.
The present situation index rose to 25, up from the 20.2 in the month prior, hitting highest its highest point since August.
The consumer confidence report conveys that many Americans are feeling slightly more optimistic about current and more immediate economic conditions. It is a moderate improvement from where reports have been in the last couple of months.
As confidence is beginning to rebound back, the Federal Reserve seems to concur with the same weary hopefulness as consumers. Releasing their first FOMC policy announcement of the year, the Fed stated that "economic activity has continued to strengthen and that the deterioration in the labor market is abating".
The Committee is anticipating an ongoing recovery in economic activity, with rates continuing to hold steady. Inflation is also likely to remain subdued for some time, too.
Temporary liquidity swap arrangements are still scheduled to be dropped as of February 1, showing the Fed's confidence in the markets. Overall, the policy statement was a cautious, yet enlightening statement of optimism.