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Aug. Consumer Confidence: 44.5 vs. 52 expected, 59.5 in June - its lowest level since April...

Aug. Consumer Confidence: 44.5 vs. 52 expected, 59.5 in June - its lowest level since April 2009. Expectations 51.9 vs. 74.9. Present situation 33.3 vs. 35.7. "A contributing factor may have been the debt ceiling discussions, since the decline in confidence was well underway before the S&P downgrade," the Conference Board says.
Comments (13)
  • With an anti-business (unless it's Union) administration choking attempted growth with endless regs and an unbridled EPA (employment prevention agency), is it any wonder that consumer confidence is reflecting that?
    30 Aug 2011, 10:06 AM Reply Like
  • Whoa…market is rather muted reaction though.

     

    Debt ceiling discussions may occur a bit sooner as the US rapidly approaches the interim ceiling of $14.694 Tril. Presently we sit at $14.605 Tril (subject to ceiling) and total $14.653 Tril.
    See Table III-C
    www.fms.treas.gov/fmsw...
    30 Aug 2011, 10:09 AM Reply Like
  • A contributing factor may be a lack of confidence in our government to do anything helpful. Both parties are preoccupied with making each other look bad and do not have time for the people.
    30 Aug 2011, 10:14 AM Reply Like
  • A more meaningless survey doesn't exist than any of the consumer confidence surveys. Their indications are always 100% predictable and reflect momentary unfiltered reaction to recent current events (in this case, the August Government and market follies). They virtually never provide an accurate indication of consumer behavior going forward, or even during the time consumers are expressing their negative sentiment.

     

    Surveyor: "Excuse me, ma'm, could you respond to a question about the economy?"
    Respondent: "Why yes."
    Surveyor: "Do you have positive or negative feelings about the economy/"
    Respondent: "Negative"
    Surveyor: "May I ask a few more questions?'
    Respondent: "I'm sorry. I have to leave now. I have a lot of shopping to do."
    30 Aug 2011, 10:31 AM Reply Like
  • I like this comment. People's general sentiments on the economy are completely in line with the headlines on CNN and such, which means nothing going forward
    30 Aug 2011, 10:59 AM Reply Like
  • There are always excuses. I think the plunge in consumer confidence had something to do with the stars aligning in a weird pattern sometime during the month which had affected the hormones which consequently made people feel sad and gloomy. Next month the stars will align in the image of a smiley face. I bet confidence will be restored!
    30 Aug 2011, 10:35 AM Reply Like
  • The sarcasm is dripping everywhere lol
    30 Aug 2011, 10:43 AM Reply Like
  • Does anyone understand why we are coming off of our lows?
    30 Aug 2011, 10:46 AM Reply Like
  • The prospect of easy (or easier) money flowing from the fed's printing press.
    30 Aug 2011, 10:55 AM Reply Like
  • also we priced in an almost recession in the US - we still haven't approached the old numbers
    30 Aug 2011, 11:01 AM Reply Like
  • jw:

     

    In fact, you have it exactly backwards.

     

    When Ben announced no new QE, the market momentarily plunged, from the reaction of the QE-believer set, but, then, it set upon a relentless course upward. Why? Because the market and corporations want less, not more, Government intervention and capriciousness, and because no QE reduces inflationary fears (see gold) and makes the likelihood of gradually rising rates much more likely (see banks).

     

    That's why the indices have been rising and are likely to continue to rise unless some new dramatic event intervenes. If the Government stays out of the soup and allows natural forces to work, look for all economic elements to improve and, especially, for bank stocks to take flight.
    30 Aug 2011, 11:01 AM Reply Like
  • I agree with you, however, the general formula (in theory) for the price of an asset,and the stock market is an asset as a whole, is: (cashflows/(1 + i)) with 'i' equal to interest rate or supply of money. The price of the asset goes up either by increase of cashflows (less costs/regulation/taxes, etc) or by lowering (increasing the money supply) the interest rate....in theory and as long as the market thinks the Fed might to forced to change its mind about intervention. I agree with you that interest are unnaturally low and should be higher and I also believe we will pay a price for that situation at a later date...delayed, but not avoidable, effect of the free market.
    30 Aug 2011, 11:19 AM Reply Like
  • jw:

     

    The "cw" about the effects of interest rates on money supply and monetary velocity only work within a range, and if they depart from that range (either way too high or too low), the curve becomes discontinuous and anomalous behavior sets in.

     

    For example, one normally posits that lower interest rates lead to higher money supply and monetary velocity, leading to increased economic activity, profits, cash flows, etc. However, when rates cross below a certain threshold (I can't specify an absolute number), unanticipated (perhaps, they should be anticipated) effects occur. Instead, of money supplies and monetary velocity increasing, they effectively decrease (i.e. money piles up, but doesn't move) because of these factors:

     

    1) Banks see little incentive to take long-term risks with miniscule spreads, so they curtail lending.

     

    2) Consumers and business decrease --not increase-- demand because a) they expect rates to remain low or go lower, and b) the opportunity cost for doing nothing, when rates are near zero, is insignificant, so people wait to see what's going to occur.

     

    It's only when rates start to move higher that we will see a surge in economic activity, as all those fence-sitters will be motivated into action to lock in lower rates. And, as demand increases and rates rise, banks, too, will be more willing to extend financing.

     

    To enforce endless artificially low rates is to guarantee economic malaise. To permit market forces to elevate rates is to ignite a self-reinforcing economic stimulus. It's only when rates get far, far higher, at the opposite extreme departure from the median, will we see economic activity inhibited for cost reasons, rather than motivation reasons, as now.
    30 Aug 2011, 11:38 AM Reply Like
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