Tuesday, October 25, 2011

Bad News

The Lehmann Letter (SM)

This morning the Conference Board released its October consumer confidence survey:


You can evaluate the 39.8 figure, following September's 46.4 reading, by putting them in context on the chart.

Consumer Confidence

(Click on chart to enlarge)

(Recessions shaded)

Not only is the index heading south, it's back to recession levels. Households are gloomy and that is a bad sign for future expenditures on homes, cars, other durables and discretionary items in general. It does not necessarily mean that we are headed back into recession. But it is further confirmation that the economy will remain sluggish.

It's also a bad sign for President Obama's reelection prospects. Consumer confidence had been falling and was at recession levels when Ronald Reagan asked the nation in 1980, "Are you better off today than you were four years ago?" Low consumer confidence hurt President George H. W. Bush in 1992 and also hurt the Republicans in 2008. When households are gloomy, they want a change in Washington. It doesn't matter who's to blame.

(To be fully informed visit http://www.beyourowneconomist.com/)

© 2011 Michael B. Lehmann

No comments: