Consumer Confidence At Recession Levels
Not surprisingly consumer confidence declined today as the weak economic data continues to poor in. Consumer confidence fell significantly for a second straight month this month, down more than three points to 58.5. Furthermore, both the assessment of current conditions, down nearly two points to 37.6, and the assessment of future conditions, down nearly 4-1/2 points to 72.4, show similar deterioration.
Furthermore, the outlook of the current jobs market this month unfortunately also deteriorated, with 43.8 percent saying "jobs are hard to get" for a three tenths gain from May. The future jobs market shows fewer people seeing more jobs ahead while expectations of future income show more seeing a decrease and fewer seeing an increase.
Overall, this is not the kind of consumer outlook that you are looking for to hope for a strong economy in the second half of the year but dovetails exactly into the personal income and spending report that we saw yesterday. The consumer is being pinched by lower wages, high costs and less take home pay after taxes and expenses. More and more Americans are now dependent on government subsidies to support their families.
The chart illustrates the "Consumer Confidence Gap" which is the difference between current conditions and future expectations. This gap is primarily driven by peoples comfort of having or being able to find a job. With the "jobs hard to get" index pushing highs normally seen in recessions it is not surprising that the confidence gap is so large. This doesn't bode well for consumption which means employers won't see the incremental demand necessary to start hiring.
We will want to continue to watch these numbers over the coming months as future plans on consumption is down in every category from buying cars, to homes and appliances. Low consumer confidence points squarely to weakness for the June employment report, news that the nation's retailers don't want to hear. Furthermore, weakness in consumer confidence will also point to a weaker than expected 2nd quarter GDP number most likely.