Monday, August 17, 2009

Consumer Confidence Drops

From Bloomberg:

Confidence among U.S. consumers unexpectedly fell in August for a second consecutive month as concern over jobs and wages grew.

The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.2, the lowest level since March, from 66 in July. The measure reached a three-decade low of 55.3 in November.

The worst employment slump in seven decades has caused salaries to stagnate, rocking even Americans who still have jobs. The need to rebuild savings following the record drop in wealth from the plunge in stocks and home values will keep limiting spending in coming months.

“The consumer’s not off to a good start in the third quarter,” Jonathan Basile, an economist at Credit Suisse in New York, said before the report. “The concerns they’ve had because of jobs and income are still lingering and showing in their lack of spending.”

Here is the chart:

However, consider these charts from

The number of people who think the economy is getting better is once again increasing. And

The right track/wrong track numbers are again moving in the right direction.

These polls measure different parts of the same idea -- are thing getting better or worse and when do you think things are getting better?

At the heart of these issues is the employment picture which is still terrible and won't be improving for some time. That means we could be seeing these numbers are low levels for some time, adding further evidence that the consumer won't be a big player in the recovery.

Finally, I will note that I have not been expecetinig the consumer to play a role.