Friday, April 22, 2011

Sour Mood: Is Consumer Confidence Deteriorating?

The Lehmann Letter (SM)

The Conference Board's index of consumer confidence won't be out till next Tuesday, April 26. It fell last month.

And this morning's New York Times may provide an hors d'oeuvre of what to expect:

A front-page article entitled "Nation's Mood at Lowest Level in Two Years” begins by saying:

“Americans are more pessimistic about the nation’s economic outlook and overall direction than they have been at any time since President Obama’s first two months in office, when the country was still officially ensnared in the Great Recession, according to the latest New York Times/CBS News poll.

“Amid rising gas prices, stubborn unemployment and a cacophonous debate in Washington over the federal government’s ability to meet its future obligations, the poll presents stark evidence that the slow, if unsteady, gains in public confidence earlier this year that a recovery was under way are now all but gone.

“Capturing what appears to be an abrupt change in attitude, the survey shows that the number of Americans who think the economy is getting worse has jumped 13 percentage points in just one month. Though there have been encouraging signs of renewed growth since last fall, many economists are having second thoughts, warning that the pace of expansion might not be fast enough to create significant numbers of new jobs.”

Those sentiments are consistent with the drop in consumer confidence recorded by the Conference Board's last poll. It's a bad sign and runs counter to some recent good news: Job growth, corporate earnings gains and stock market advances. And the sour mood reflects more than just rising gasoline prices. The recession dealt a blow to one area of the economy that has shown no sign of recovery: Residential real estate. Nothing effective has been accomplished there, and that morass is part of the disillusionment.

The economic expansion remains fragile and worth watching closely.

© 2011 Michael B. Lehmann

1 comment:

ivy said...

Housing starts have fluctuated recently. I think the good predictor is not the affordability for houses, but the consumers(the house buyers), we have more than 10% unemployment in California and roughly 9.2% unemployment in U.S., we hardly expect that the housing market will recovery sharply. And if the mortgage rates go up, it will be more difficult to push people to buy the house which will restrict the house market recover. From this month’s data, recovery is not optimistic; it’s not yet in sight.