economy Markets

Surprise! Consumer Confidence Is Coming Unglued

Color me not (at all) surprised.

Consumer confidence deteriorated in July, The Conference Board said Tuesday, flagging rising new coronavirus infections as the proximate cause behind a precipitous drop in expectations.

The headline print was 92.6 for the month, well below consensus (95.0) and closer to the bottom end of the range than the top.

Expectations tumbled all the way to 91.5 from 106.1 last month. That’s the biggest drop since March.

“The Present Situation Index improved, but the Expectations Index retreated. Large declines were experienced in MichiganFloridaTexas and California, no doubt a result of the resurgence of COVID-19″, Lynn Franco, Senior Director of Economic Indicators, remarked.

Again, this is the opposite of surprising. We saw University of Michigan sentiment deteriorate in the preliminary reading earlier this month. If you recall, the accompanying color was dour.

Not much needs to be said other than what should be obvious to everyone — namely that the reinstatement of lockdowns and other containment measures across the Sun Belt is leading consumers to question the viability of the recovery.

That should help prod lawmakers along in the quest to find a bipartisan solution to the stimulus stalemate.

“Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labor market and remain subdued about their financial prospects”, Franco went on to remark Tuesday. “Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending”.

Indeed it does not.

You’re reminded that this comes as millions of jobless Americans are about to see their extra unemployment benefits cut by as much as two thirds. Even if Democrats manage to negotiate for a higher weekly payment, it will almost surely be lower than the $600/week which helped buoy consumption and retail sales in the wake of the lockdowns.

Just 31.6% of consumers in The Conference Board’s survey said business conditions will improve over the next six months, down sharply from 42.4% in June.

It’s coming unglued, folks. And it wasn’t fastened very tight to begin with.


9 comments on “Surprise! Consumer Confidence Is Coming Unglued

  1. Curt Tyner says:

    Holy Sht it took long enough for our dystopian tribe to shake themselves out of our collective American exceptionalism. Maybe we really can get back to normal………well fuk that WE’re #1 just ask us.

  2. MC says:

    “A classic catalyst for a new monetary policy tool known as the CRAIMT is also under construction through the same dynamics.” what is the FED up to now?

  3. John Banjo says:

    my unofficial theory has been that consumer confidence is highly correlated with stock market performance, wealth effect, etc. If so we currently have a decoupling. Stock market correction / sell off on the horizon…?

    • Vlad is Mad says:

      If you look at banks, industrial, energy companies they peaked out outright and relative basis to SPX in early June which tells you that the market gets it. After a sharp bounce, not doubt responding to policy stimulus, these sectors are stuck in neutral if not reverse which is consistent with a deterioration of consumer sentiment which is also impacted by polarization of policy and worries about hysteresis setting in leading to a long drawn out recovery. This may be right or dead wrong, but it seems the message from markets.

  4. George says:

    Well….whether or not it is doorstops , paperweights ,Tulips or Gold what is going on is not conspiracy theories but merely widely held perceptions among the (investor grade) public that the existing system is steering on automatic pilot with a non programed chip in random mode….
    First the system bailed out the Corporations (tax cut) then they bailed out the indispensable banks without which the wealthy (really all of us ) would not thrive and then they threw trillions from Heaven at everyone else without which no one could survive … It comes to mind there are structural issues that are ( Not forgotten ) ignored at the root of the Capitalism system that has had it’s goalposts moved so many times that neither the offense or the defense has a clue as to the direction of the goal…
    So everyone buys Gold (valueless Gold ) but it is stable and somehow easier to store than sand… It is a fad item but what the Hell Facebook survives and so do other useless aspects of modern day life….. so … At any rate the survival of the Dollar as reserve currency for prior discussed reasons is not the threat some to seem to think but the (glacial ) pace of change is going into high gear and change we will have…
    There is a perception out there that the world is changing per Lord of the Rings ‘I can see it in the water …I can smell it in the air the world is changing ‘…… The rings ironically were Gold ….. Summer doldrums right Dr H……

  5. Tom Swift says:

    I will refer everyone to George Carlin’s “Dumb Americans” monologue.

  6. Joey says:

    Honest question: why don’t we reconfigure the economy so that it isn’t so dependent on having everybody spending money that they don’t have on consumer goods that they don’t need, the production of which continues to damage the planet on which we live? When consumer confidence is surveyed, is there an option to say “I’m tired of the whole consumer-driven economy”?

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