Consumer Confidence Remains At Lowest Levels Since 1980
Consumer confidence up ticked slightly this month to 57.8 but it was the forward expectations that severely hit the skids.
Consumer expectations, in a reflection of the weak jobs market and recent trouble in the financial markets, are at the lowest point since the Iranian hostage and oil crisis more than 30 years ago.
The six-month outlook, which is the leading component of the consumer sentiment index which is also at its lowest levels, slipped to a reading of 47.0. As recently as May, this component was approaching 70. With the jobs market showing renewed signs of weakness, the economic environment deteriorating and incomes declining relative to the rise of inflationary pressures as reported by yesterday's CPI report - it is no wonder that the average consumer is retrenching and believes, according to the recent Gallop surveys, that we are still in a recession.
More and more indicators continue to roll in indicating that we are heading into something more than just a "soft patch". While a "recession" is not yet being admitted by the analytic masses in the media it seems more than readily apparent to the average American. While we debate over more stimulus here in the U.S. and China is in talks now to acquire Europe, hypothetically speaking or not, there is little doubt that the consumer is struggling just to make ends meet.
This highlights the more global problem that the Whitehouse is trying to fix..."Jobs". With the consumer retrenchment and retail sales week this puts additional pressure on the employment issue. The deterioration of consumptive abilities reduces aggregate final demand on businesses who in turn look to cost cutting measures to maintain profitability. What the Whitehouse is missing in its attempt to stimulate job growth is that temporary measures produce few results at a very high cost.
As we have written about recently in the "Great American Economic Lie" it will require the clearing of the excesses that have been built up over the last three decades in order for the economy to begin to return to a more normalized economic growth cycle. That process will take quite some time and it looks like the consumer already knows that.