NEW YORK CITY (7/30/14)--The Credit Union National Association's interim Chief Economist Mike Schenk appeared on the online investment show "TheStreet" Tuesday to discuss a recent surge in consumer confidence.
This week, the Conference Board reported that its Consumer Confidence Index skyrocketed to a seven-year high in July to a reading of 90.9 from 86.4.
Schenk told TheStreet host Joe Deaux that it's encouraging to see confidence indices on the mend, especially when consumer behavior matches that sentiment.
"I don't look at what people say they're going to do, or how they feel, but I look at how they're actually behaving," Schenk said. "As an economist at the Credit Union National Association we serve 100 million members throughout the United States . . . and I can tell you those folks are engaged.
"From a borrowing perspective, loan growth at credit unions is right around 10%. You've got to go back about a decade to see growth that high."
When consumer confidence and behavior are both on the upswing, Schenk said, it demonstrates that consumers are "ready, willing and able to spend, (and spend) on big ticket items. Without confidence, they're going to be a little more cautious, so that's really good news overall.
"It leads us to the conclusion that the economy will not only continue to grow at healthy rates, but likely grow at rates that are increasing over our forecast horizon."
Schenk slightly tempered his enthusiasm over the data, however, as the reading falls short of where confidence should be compared with previous recoveries.
"At this point in previous recoveries, for example, if you look at the past three recoveries, the reading would be well over 100," Schenk said. "So it's good that confidence is up and increasing, and I think it bodes well for economic output overall, but we have other measures of consumer confidence that really give me pause."