No Surprise: Confidence Among U.S. Consumers Falls Again in October

Tuesday morning, the Conference Board reported that confidence among U.S. consumers "unexpectedly" fell for a second month in October, according to Bloomberg. For those who live in the real world (e.g., Financial Armageddon readers), the number shouldn't have been much of a surprise.

Regardless, what I found interesting is the continuing wide disparity between consumers' upbeat views on the future and their bleak assessment of current conditions. I wonder how long will it be before that gap contracts -- most likely as a result of lofty hopes being dashed -- and a more broad-based panic sets in?

And just to show that Tuesday's number wasn't just an outlier, Business Insider's The Money Game blog highlighted some less than optimistic perspectives on the economy from another survey of Americans in "Gallup: Consumers And Businesses In All-Around Retreat":

A little more color on Tuesday morning's punk consumer confidence data, courtesy of Gallup:

Economic Confidence worsened slightly last week, as Gallup's Economic Confidence Index fell to -29 — down nine percentage points from where it was just a month ago. The percentages of Americans describing the economy as "getting better" (37%) and as "getting worse" (58%) are not much different from those of the prior week, but are considerably worse than those of the same week last month. "Poor" ratings of the economy are up five points from a month ago to 48%, while "excellent"/"good" ratings are at 11% (vs. 13% a month ago). The August and September gains in economic confidence seem to have dissipated in October.

Job Creation also lost ground last week, as Gallup's Job Creation Index fell back to +1 — down three points from the prior week's 2009 high. The percentage of employees saying their companies are hiring fell back to 24% — down slightly from 26% the prior week and 27% a month ago. The percentage of workers saying their companies are letting people go was essentially unchanged at 23% from 22% the prior week and 24% a month ago. Right now, layoffs are four points worse than they were during the height of the financial crisis a year ago, while hiring is down six points.

Consumer Spending fell back to its new normal last week, as self-reported daily spending in stores, restaurants, gas stations, and online averaged $61 — down $15 from the prior week and essentially the same as a month ago. It appears the "paycheck effect" combined with likely Halloween-related spending to create a temporary spending surge. Overall, the current consumer spending trend continues to disappoint: it is down 34% from the $92 average of the same week in 2008, even though last year's comparable reflects conditions that followed the onset of last year's financial crisis.

Comments

[bbro:]

Expectations are a leading indicator...present situation is a lagging
indicator a lot of the time.....

Oct 28 05:13 AM

[Moon Kil Woong:]

So far the administration has had an easy time pointing out that unemployment is a laggin indicator. However, they'll have a bit harder time making a case that falling consumer confidence and demand for real goods (discounting inflation and dollar depreciation) is either irrelevant or points to a recovery.

So far they only have 3 bases covered, rising equity prices, rising commodity prices, and rising US Treasury bond rates. Of course, mysteriously these also point to overly lax monetary policy, out of control government spending, and inflationary pressures. Go figure.

It seems like if we are going to dig ourselves out of this recession we'll have to do it on exports and a dependence on an overseas recovery. America is pretty much shooting itself in the foot with government measures that only hobble free market resource realignment and private sector recovery.

Oct 28 05:24 AM

[AxIt:]

"Unexpected" fall of consumer confidence? The situation is that scores of consumers are still being laid off to benefit the corporations' bottom line (we have to beat these analysts estimations, right?) and we should expect an increase in their confidence? How amusing.

Oct 28 05:37 AM

[bbro:]

What inflationary pressures besides commodities??? Sure aint
wages.....


On Oct 28 05:24 AM Moon Kil Woong wrote:

> So far the administration has had an easy time pointing out that
> unemployment is a laggin indicator. However, they'll have a bit harder
> time making a case that falling consumer confidence and demand for
> real goods (discounting inflation and dollar depreciation) is either
> irrelevant or points to a recovery.
>
> So far they only have 3 bases covered, rising equity prices, rising
> commodity prices, and rising US Treasury bond rates. Of course, mysteriously
> these also point to overly lax monetary policy, out of control government
> spending, and inflationary pressures. Go figure.
>
> It seems like if we are going to dig ourselves out of this recession
> we'll have to do it on exports and a dependence on an overseas recovery.
> America is pretty much shooting itself in the foot with government
> measures that only hobble free market resource realignment and private
> sector recovery.

Oct 28 06:36 AM

[User 353732:]

Falling confidence is but the obverse of fear.
The omnibus fear among scores of millions of ordinary Americans is that they are gradually but inexorably becoming disenfranchised: economically, politically and culturally and that they are powerless to arrest the decline.

Millions of households do not know what to believe, whom to trust and indeed how they can protect themselves from rising threats and vanishing opportunities.
More individuals, families and small business owners are becoming fearful that present conditions are not really transient; that there is no "V" or any other kind of recovery; and that rising taxes, multiplying bad regulations, unjust denial of merited credit, manipulated financial markets and badly damaged real estate markets will make a middle class life impossible on a nominal middle class income.
There is still hope, naturally, that the future will be much better than the present but as each passing month brings no relief this hope is beginning to erode. In another 6 months ,expectations of future conditions may worsen deeply unless there is a sustained and dramatic reversal of National direction.

Oct 28 07:03 AM

[predictorma...:]

First, I don't see why anyone is surprised. Not much is getting better for anyone I know. Maybe not any worse, but that doesn't make them (as consumers) get excited about opening the wallet.

Also, while the market went down yesterday in response, it's nothing like how it went up in the "green shoots" days, when a slight blip up got everyone chanting "V shaped recession".

Soon everyone will see we are in for a long slog, and I think the market will correct itself to that view.

Oct 28 08:16 AM

[Windsun33:]

The bothersome part is that down volume - both in stocks and consumer confidence are both increasing. Consumer confidence is often rather fickle and nebulous, but the increasing down volume in stock sales is something that can be seen and measured.

As to why, there are several reasons - I think mainly that most people are thinking more and more that the light at the end of the tunnel really IS a train. They see houses all over their neighborhood with for sale signs, and nothing coming out of Washington but endless pronouncements of the "consumer option" in a healthcare bill that looks like Frankenstein.

They are starting to get a real sense that the Beltway Crowd simply does not have a clue what it is doing. It seems to be more important to attack Fox News and the CoC than to figure out why small businesses are falling like flies.

Oct 28 10:48 AM

[bbro:]

Did you know when Consumer Confidence is below 66 which over the last 40 years has been 12% of the time...the stock market is up
20% per annum.....

Oct 28 01:20 PM

[TeresaE:]

Not shocking

Yep, things are "picking up"

But a ten percent increase from last month is still down nearly 60% from 4 years ago. And still down 15-20% from last year, which was dreadful.

Up, but not enough to pay the bills, let alone the new bills WDC is dreaming up daily.

Shocking. Things are dismal, only the spin - and fake bank profits - are up.

The game plays on as long as they say it does.

Oct 28 07:15 PM

[doubleguns:]

Unemployed workers know that they only have so many weeks of payments. As each day goes by they get closer to the day of NO PAY CHECK, leading to less confidence.

Many more have passed that point and have no paycheck, and now we are getting into the construction business winter seasonal lays offs and I am sure they have no idea if or when they will be back to work.

Frankly, the only thing I am confident about is our govt is doing squat to create jobs.

Oct 28 07:36 PM

[tripleblack:]

We will come to rue the day when the Stimulus Bill (and many others) were passed with little thought and no care for creating jobs...

The idiots who voted for it did not even READ it.

This alone is grounds for voting them out of office.

Oct 28 08:42 PM

[doubleguns:]

I looked at this chart again and noticed that when the present situation is down, way down. Expectations are high and obviously "OUT OF WACK" with reality. 1991 and 2003. It stayed that way for most of the down cycle and most of the up cycle.

I guess we can expect more of the same, a lot more with the administration and all of Washington preaching from the pulpit that the recession is over.

Oct 28 09:11 PM

[bbro:]

If jobs are created next year will you retract your statement???


On Oct 28 08:42 PM tripleblack wrote:

> We will come to rue the day when the Stimulus Bill (and many others)
> were passed with little thought and no care for creating jobs...
>
>
> The idiots who voted for it did not even READ it.
>
> This alone is grounds for voting them out of office.

Oct 29 06:27 AM

[tripleblack:]

LOL, no, creating jobs AFTER the recession has sat on top of us for an extra year or two was not the idea.

To be blunt, the suggestion of a tax holiday for all Americans for something like 3 months (or 6) would have been far more on point and effective.

As I have indicated elsewhere, however, there is STILL time for something of a "stick save" if the unspent monies in TARP, StimBill and deficit-rich Budget are re-focused on the small-midsize companies where jobs are born. I would give due credit for that.

Anyone can make mistakes, we all do, but it takes strong leaders to admit mistakes and take the steps necessary to rectify those mistakes.


On Oct 29 06:27 AM bbro wrote:

> If jobs are created next year will you retract your statement???
>

Oct 29 09:35 AM

[tripleblack:]

Oh, but as for my comment about voting people out of office for voting for major bills without even taking time to read them, or allow the public time to figure out what is in them?

I will never change that opinion, and yes, I believe that alone is grounds for voting them out of office.


On Oct 29 09:35 AM tripleblack wrote:

> LOL, no, creating jobs AFTER the recession has sat on top of us for
> an extra year or two was not the idea.
>
> To be blunt, the suggestion of a tax holiday for all Americans for
> something like 3 months (or 6) would have been far more on point
> and effective.
>
> As I have indicated elsewhere, however, there is STILL time for something
> of a "stick save" if the unspent monies in TARP, StimBill and deficit-rich
> Budget are re-focused on the small-midsize companies where jobs are
> born. I would give due credit for that.
>
> Anyone can make mistakes, we all do, but it takes strong leaders
> to admit mistakes and take the steps necessary to rectify those mistakes.
>

Oct 29 09:38 AM