Drennen on Consumer Confidence – Hobart and William Smith Colleges \
The HWS Update

Drennen on Consumer Confidence

Professor of Economics Tom Drennen was quoted in an article in the Messenger Post about consumer confidence in New York. The article notes, “According to the latest Quarterly Consumer Confidence survey released Friday, July 8 by the Siena (College) Research Institute, confidence rose in just three of the nine upstate regions. Rochester showed a slight uptick in confidence, while Utica and Binghamton were down in the dumps.”

It goes on to note Drennen “said the survey demonstrates the slow pace of recovery in the area.”

“Higher gas prices were a major drag on overall confidence. I expect that slightly lower gas prices in July will help buoy overall confidence as consumers have less money to spend on other items,” he said.

“Another survey by Thomson Reuters suggests room for optimism. Their survey, released this week, showed same-store sales increased by 6.5 percent in June, beating economists expectations (4.9 percent). This survey helped the stock market Thursday, sending it to a yearly high. What these competing surveys really illustrate is the continued uncertainty in the markets as the economy tries to recover,” he said.

The full article follows.


Messenger Post
Economic misery has plenty of company

Julie Sherwood • staff writer • July 17, 2011

MPNnow.com –
Jessica Churchill feels fortunate to have a job, but that doesn’t make her any more optimistic about the future. The Canandaigua resident lost her job recently in the hotel industry. After searching for a few months, she landed an office job with a local construction company. A single mom with two young children, Churchill is glad to be working but less confident than she was a year ago.

“It seems a lot harder, like there are a lot less jobs out there,” she said.

Likewise, fellow Canandaigua resident Robert Pierson, who moved from Texas a few months ago to live with family, isn’t counting on an easy time of it. A machinist and welder by trade, Pierson hopes to find a job soon but knows that may not be realistic.

“I’ll take whatever I can get,” he said.

That sentiment reflects both a local and national trend.

According to the latest Quarterly Consumer Confidence survey released Friday, July 8 by the Siena (College) Research Institute, confidence rose in just three of the nine upstate regions. Rochester showed a slight uptick in confidence, while Utica and Binghamton were down in the dumps.

“Believe me, I can’t wait to report a ground swell of confidence, but it is nowhere to be seen or felt across New York,” said Dr. Douglas Lonnstrom, professor of statistics and finance at Siena College and SRI founding director. “We measure current, future and overall confidence in nine regions. Not one of the three scores in any of the regions shows optimism topping pessimism.

“New York City is strongest, but in some areas like Utica and Binghamton, confidence is frighteningly low.

“Overall, we really appear to be stuck in an economic rut. We spin the tires, consumers buy what they need, when they need it so long as it’s on sale, but collectively in the face of budget woes, unemployment concerns, and worries about the future, the mood remains dark. When the scores top 75 across the board, it will be time to celebrate.”

At 71.4, the New York City region had the highest overall consumer confidence of the nine regions; the Binghamton region had the lowest, at 55. Rochester comes in at 67.

Tom Drennen, professor of economics and chairman of economics at Hobart and William Smith Colleges in Geneva, said the survey demonstrates the slow pace of recovery in the area.

“Higher gas prices were a major drag on overall confidence,” Drennen said. “I expect that slightly lower gas prices in July will help buoy overall confidence as consumers have less money to spend on other items.

“Another survey by Thomson Reuters suggests room for optimism,” he added. “Their survey, released this week, showed same-store sales increased by 6.5 percent in June, beating economists’ expectations (4.9 percent). This survey helped the stock market Thursday, sending it to a yearly high. What these competing surveys really illustrate is the continued uncertainty in the markets as the economy tries to recover.”

Another local expert on the subject is retired economist Jim Fralick. He has been a professor at Syracuse University’s Maxwell School and retired as principal and director of European economic research for Morgan Stanley & Co. The Canandaigua resident has worked as senior economist for the Federal Reserve in Washington, D.C.

Statistically, there is a close correlation between employment and income growth, and consumer confidence, he said. That may account for the small improvement in Rochester’s consumer confidence due to a slightly better employment picture in the early months of the second quarter.

“Recent reports have shown that health care and education employment have been on the rise in our region,” Fralick said. “In addition, professional and business services have shown modest increases. However, government jobs have been declining and this has been a drag on overall job growth and consumer confidence.

“On balance, the brighter jobs in our region picture resulted in the rise in consumer confidence and helped propel the recent pick-up in retail sales at local malls. But while this improvement is encouraging, the Sienna study does show that we have yet to return to levels that would be consistent with a healthy economic expansion in the Rochester area.

“People continue to worry about their job security, future job prospects for their children, their debt levels and the impact that future cuts in government spending will have on their retirement plans.”

In addition, he added, the national jobs picture remains disappointing.

“Only 18,000 new non-farm jobs were created in June, following a very weak 25,000 increase in May,” he said. “The consensus was for a 125,000 increase in June employment. The dismal jobs growth in May and June suggests that the next Sienna Confidence Report will show little of no gains for the third quarter and that spending plans will continue to point to sluggish actual outlays on big ticket items.”
Copyright 2011 MPNnow. Some rights reserved