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Confidence among U.S. consumers rose in April to its highest since September 2008, the month that Lehman Brothers filed chapter 11. Today, the Reuters/University of Michigan reported that "final" index of consumer sentiment rose to 65.1, the second straight monthly improvement - from 57.3 in March.  As a point of reference, the index reached a three-decade low of 55.3 in November 2008 (and people then started reading books about Great Depressions)...

Hammering home the Research Edge MACRO - MEGA Theme; (M) record low mortgage rates, (G) cheap gasoline and (A - Assets) surging stock prices are providing a stimulant the American consumer - despite rising unemployment (at a lesser rate)...

We're not Keynesians, but Keynes has some great one liners. "Animal spirits" is the term John Maynard Keynes used in his book "The General Theory of Employment, Interest and Money" to describe emotion which influences human behavior and can be measured in terms of consumer confidence.

"Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits - a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities."

John M Keynes, The General Theory of Employment, Interest and Money, London: Macmillan, 1936, pp. 161-162.

Howard Penney
Managing Director

Squeezy's Animalistic Spirit  - sent