July consumer confidence soars
posted at 10:04 am on August 1, 2007 by Bryan
How’s that Bush economy doing?
Consumer confidence in the U.S. jumped more than forecast in July to the highest level in almost six years, suggesting the June slowdown in spending could be temporary.
The New York-based Conference Board said its index of confidence soared to 112.6 from a revised 105.3 in June. Economists had expected a reading of 105 for last month.
In another report Tuesday, the Commerce Department reported that consumer spending rose 0.1 percent in June, the smallest gain in nine months and down from a 0.5 percent increase in May…
Confidence among Americans, whose spending accounts for more than two-thirds of the economy, is being shored up by a jobless rate that’s near the lowest in six years and income gains that have outpaced inflation.
“The consumer economy, once again, remains on a firmer footing than it has generally been given credit for,” said Richard DeKaser, chief economist at National City Corp. in Cleveland. “Even in spite of the pause in spending, we will see them come back.”
Wall Street has been nightmarish lately thanks to some real and looming credit threats, but activity there isn’t the whole economic picture. Overall, the economy grew strongly in the second quarter of 2007. And just to cherry-pick one US company, GM seems to have rebounded well after taking a huge $3.4 hit at this time last year.
GM today announced that it earned $891 million in the second quarter. That is the third consecutive quarterly profit for the nation’s largest auto maker which reported a $3.4 billion loss during the same period last year.
While GM is continues to sturggle [sic] in the North American market, the latest results were due to increasing sales in international markets. The company reported a net loss of $39 million in North America for the second-quarter, which is a great improvement over last year’s $3.95 billion loss domestically.
I won’t pretend to be an economist, but the overall economic picture strikes me as more positive than negative.
Blowback
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I am sure this will find its way to page 22C of many newspapers.
BillLalor on August 1, 2007 at 10:22 AM
As a futures trader I can tell you that consumer confidence is a backward looking indicator. The US economy has one major problem and that is the unwinding of the housing bubble. Mortgage equity withdrawals, people taking equity out of their homes, subsidized spending, via the wealth effect, over the past few years to such an extent that we would have had about 1% GDP growth without it.
That is how important the housing bubble was to our economy. I am a conservative but I will not be willfully blind to the fact that easy credit was responsible for much of our economic growth for at least the past 10 years. Too bad the only person talking about this is that loon, Ron Paul.
Bill C on August 1, 2007 at 10:42 AM
Its Bushes fault :)
EricPWJohnson on August 1, 2007 at 10:43 AM
Right on Bill.
When the economy was in the Klinton recession and Dubya was just taking over, it was all his fault. The media talked about the economy all day long, blaming Bush before he enacted any policies. After the tax cuts took effect, the media suddenly forgot about the issue. Bias? Naaaah.
Tony737 on August 1, 2007 at 10:45 AM
exactly things are not as rosey as bryan thinks, shame ron paul is such a dweeb.
zane on August 1, 2007 at 10:46 AM
Where do you get “rosy” out of “more positive than negative” and notes that there’s a credit threat on the horizon?
Bryan on August 1, 2007 at 10:48 AM
The company I most recently worked for — American Home Mortgage, formerly First Home Mortgage in Chicago — was the latest bold-faced, red letter headline at Drudge, as their stock closed Friday at 10.47 a share, and then couldn’t open on Monday (bad weekend).
When it finally traded again on Tuesday afternoon, it was at 1.4 a share. Dragged down the whole market. This was a really solid conforming mortgage banker, but they had a crazy uncle in the attic — a really ugly second mortgage portfolio — that broke through the upstairs window and fell off the roof into the street.
Oops.
Jaibones on August 1, 2007 at 10:59 AM
That was a litte OT, wasn’t it? Since I’m out of bounds, might as well play this shot anyway. Dennis Miller had a nice little interview with Michael Yon this morning; Yon is terrific.
Plus, he came back from all his commercials with Zeppelin, which is always nice.
Jaibones on August 1, 2007 at 11:00 AM
It was odd that the growth was like 1.3% and now its 3.4% or something. I thought after it went down to 1.3; it was recession imminent; personally.
I’m in retail (online), so its something i dread, but the economy has been so good for so long, that i felt it had to be around the corner. Guess not.
lorien1973 on August 1, 2007 at 11:26 AM
Coincidentally, I will be driving around the near Southside trying to run over Kos Kidz listening to the Immigrant Song. Aaah, ahh, ahhhh, Aah, I come from the land of the ice and snow…
Bryan, Please don’t take this the wrong way but a lot of people look at these backward looking economic indicators and think that everything is going to be fine while the forward looking ones are pretty grim. Both Bush and Clinton benefited from an overindulgent Fed. Easy money produced the Nasdaq and housing bubble which was like giving more drugs to an addict and thinking because their withdrawal symptoms have abated then there is no problem. There are no good ways to deflate a bubble. Someday our society will pay a heavy price for this malfeasance.
Bill C on August 1, 2007 at 12:21 PM
In my view, the biggest problem we have, and will have, is the bad money lent out for the past few years by scores of mortgage houses. The insanity was in 125% mortgages, the below prime notes, ‘first time buyers’ loans to anyone, and of course loaning money to illegals that you cant find.
How long did they think it would run? There is a massive amount of bad paper out there and when those homeowners/ loan recipients go south and can’t pay, there will be NO equity to resolve so then the banks will be near red for a while…maybe a long while.
What all this does to wall street, I don’t know. But the money chain has a definite ‘bad link’ in it today.
shooter on August 1, 2007 at 1:59 PM
The mortgage issue could become a real problem. Bankruptcies are up and home prices are starting to stall if not fall in some places.
Anyone who is younger than 30 doesn’t really know what a real recession feels like. It’s not pretty. If the economy course corrects a little this is normal and not cause for too much concern. But like 2000 the effects won’t really show up until the new president is in office. Pundits will react accordingly.
The housing issue affects the new home construction and a lot of blue collar jobs in turn.
Bradky on August 1, 2007 at 6:59 PM