Consumer Confidence Turns Green, but Housing Is Still Muddy

Consumer confidence for May sprang up like all the green shoots we keep hearing about. From a low of 25 in February and 41 in April, the Conference Board's index reached 54.9, which is the cheeriest level since September -- before the Lehman Brothers bankruptcy. The absolute value of the CCI is still pretty low -- we have yet to reach the lower limit of confidence during the last recession -- but it's a start.

Regional spirits improved from coast to coast, but rose most in the New England, South Atlantic and Mountain territories -- by over 20 index points between April and May. The index reads above 50 in every region except the North Central, which presumably reflects attitudes in Detroit, and the Middle Atlantic, where investment bankers are still muttering about their bonuses.

The lagging regions also surround the cities where home prices showed record monthly declines in March -- Detroit, Minneapolis and New York -- according to the S&P/Case-Shiller home price index, released Tuesday morning as well.

The house price survey, which dates back to March, doesn't reveal much green anywhere. The national measures were down about 19 percent year over year, and about two percent from the prior month; both rates of decline were ever-so-slight improvements over the February report. Year-over-year declines were greatest in the usual suspects of Phoenix, San Francisco and Las Vegas -- all over 30 percent.

In more positive news, Charlotte, Denver and Dallas all posted small home-price increases from month to month. I would have expected the gains to be in localities where the price weakness had been greatest, a "dead cat bounce" sort of thing, but all these cities were spared the really awful markets -- declines from the tops of their respective cycles have been less than 15 percent. Versus national unemployment of 8.9 percent in April, Texas and Colorado both were better than average, with respective jobless rates of 6.7 percent and 7.4 percent, affording firmer markets.

After four days of declines in the S&P 500, the consumer confidence report was well received, as the index rose 1.8 percent within 15 minutes of the news release, and moved higher to two percent by noon.