Confidence in the economy is increasing -- at least that's the
news from the Conference Board, a private research group that
reports on such matters each month.
The New York-based group said Tuesday that confidence in the
U.S. economy during the month of April rose to its highest level
since September 2008, when the financial crisis began to take
The Consumer Confidence Index , which measures how American
consumers feel about current and future economic conditions, rose
to 57.9, up from 52.3 in March and the highest reading since
September 2008's 61.4. A pre-release survey of economists predicted
a reading of 53.5.
The Consumer Confidence reading is important because consumer
spending accounts for about 70% of economic activity in the United
States. And the better consumers feel about things economic, the
more they're likely to spend. After suffering an all-time low
reading of 25.3 in February 2009, the current reading marks a
significant improvement, but also signals that there is still a
long way to go before reaching what is considered a healthy reading
of at least 90, and a robust reading of at least 100.
For investors, this means several things.
Rising corporate profits combined with promising manufacturing
and new home sales data released Friday seem to indicate that an
economic recovery is indeed underway, albeit at a measured pace.
Strong results from bellwether companies like
seem to confirm that demand for goods is increasing.
But investors only needed to look to
Apple's (Nasdaq: AAPL)
results to get an indication of that. Along with reporting
blow-out first-quarter earnings on April 20, the company reported a
+131% year-over-year increase in iPhone demand, while also
releasing the iPad tablet computer.
Many economists predict it will take another year before
consumer confidence reaches levels commensurate with a strong
economy. In this case, it might seem obvious to go with stocks like
Amazon.com (Nasdaq: AMZN)
Best Buy (
-- or even a broad sector exchange-traded fund (
) like the
Consumer Discretionary SPDR (
. If only it were that easy. Not all retailers are created equal
and some (like electronics currently) will do better than others in
One area of promise for investors in the intermediate term could
be online travel. Companies such as
Expedia (Nasdaq: EXPE)
Orbitz Worldwide (Nasdaq: OWW)
Priceline (Nasdaq: PCLN)
posted strong year-over-year gains after abysmal travel volume last
year. As a recovery sets in and consumers begin to take more
vacations, these stocks could continue their winning streaks.
A late-stage consumer confidence play could be
Harley Davidson (
. The company has yet to rebound with the rest of the market mainly
because its heavyweight motorcycles are a sizeable purchase for
consumers and the Harley-Davidson Financial Services arm has found
it difficult to access credit during the downturn. But the company
enjoys rabid brand loyalty and once the national employment picture
improves and confidence rises, male baby-boomer consumers should
flock to Harley Davidson dealerships looking for a first-time
mid-life indulgence or to trade up to a more expensive ride.
Disclosure: Brad Briggs does not own shares of any security
mentioned in this article.