Consumer confidence plunges in June

posted at 11:36 am on June 29, 2010 by Ed Morrissey

In yet another milepost for “Recovery Summer,” a new report on consumer confidence has the Dow down over 200 points this morning.  The Conference Board shows that consumers have pulled back much more significantly than analysts predicted, losing ten points in May:

Americans, worried about jobs and the sluggish economic recovery, are having a relapse in confidence, causing a widely watched index to tumble in June and raising concerns about consumer spending in the critical months ahead.

The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index dropped almost 10 points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting the reading to dip slightly to 62.8.

June’s reading marked the biggest drop since February, when the index fell 10 points. The index had risen for three straight months since then.

Both components of the index — one that measures how consumers feel now about the economy, the other that assesses their outlook over the next six months — dropped. The Present Situation Index decreased to 25.5 in June from 29.8 in May. The Expectations Index declined to 71.2 from 84.6.

The AP avoids the use of its favorite adverb until farther in the piece, when it describes the collapse in new-home sales previously announced this month.  Investors haven’t been fooled, however, as they note that the Dow has fallen almost 10% over the last two months.  Those holding capital have begun sheltering themselves from the storm.

Anne D’Innocenzio gets it right when she notes that unemployment is the big problem — and that it’s about to get worse:

Economists already had believed confidence will remain weak for at least another year because of stubbornly high unemployment. … A key issue is jobs. The Labor Department is expected to report on Friday that employers eliminated 110,000 jobs in June, and the jobless rate is expected to tick up slightly to 9.8 percent, from 9.7 percent in May, according to economists surveyed by Thomson Reuters. That follows a bleak report in May, which showed employers added 431,000 jobs but the vast majority were temporary census positions.

Recovery Summer, or Recovery Bummer?  Economists are beginning to wonder whether we’re heading into a double-dip recession, or whether the first one ever really ended:

Monday’s weak consumer spending data is the latest in a string of reports that has many Americans worried about a “double-dip” recession.

Then again, considering the unemployment rate has remained elevated, many Americans would be forgiven for thinking the recession that began in December 2007 still hasn’t ended. Notably, that’s the view of the National Bureau of Economic Research (NBER), the nation’s official arbiter of economic expansion and contraction.

Among the signs suggesting the NBER is right to hold off in declaring the recession over:

Housing Rolling Over: Last week’s housing numbers were horrific, especially the steep drop in new home sales. Still, Coldwell Banker CEO Jim Gillespie tried to put some lipstick on the proverbial pig on Tech Ticker last week.

Jobs Still Hard to Come By: Despite signs of recent progress, “there’s no possibility to restore 8 million jobs lost in the Great Recession,” a notably candid Vice President Joe Biden said Monday. Friday’s jobs report is expected to show overall payrolls declined by 115,000 in June.

Instead of Recovery Summer, it looks more like Midterm Malaise.


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Mass bankruptcies, foreclosures, defaults, etc. all at the same time will lead to chaos in the streets.

jp on June 29, 2010 at 12:36 PM

Freedom and free markets are scary let’s have more governmental control(/s)

You fear of the unknown is causing you to not embrace the only solution to the problem

unseen on June 29, 2010 at 12:44 PM

Unseen hasn’t quite touched on it, but part of the problem is that Obama/Peloski/Reid have created such uncertainty and fear about what they’re going to do – not just Obamacare, but Cap and Trade and everything else – that most business owners/managers are hunkering down. This parallels the Great Depression, where Roosevelt’s administration kept changing the rules every year, people couldn’t plan for the future, only adapt to an ever changing present.

LarryD on June 29, 2010 at 12:46 PM

Are stores even hiring people this summer? I have to admit I havn’t been in a dept. store in months.

Cookies Mom on June 29, 2010 at 11:53 AM

Not only are they not hiring, they have cut hours to the bone making four do the work of eight but all the employees they still have are only working 16-20 hours a week.

Jvette on June 29, 2010 at 12:47 PM

Maybe we’ll get lucky and Japan will bomb Pearl Harbor again.

Dr. ZhivBlago on June 29, 2010 at 12:47 PM

The fact that after world governments have pushed Trillions into the economy and we have not had inflation tells you that the deflationary event occuring since 2008 has not run its course and will not stop until allowed to do so

unseen on June 29, 2010 at 12:28 PM

Nearly everyone overlooks that simple statement of fact. A lack of inflation even after nearly every government in the west has poured that much money into the global economy means that there was a huge amount of deflation that got masked. If the money spiot ever really gets turned off, we are in for a short hard bumpy ride to the bottom.

Johnnyreb on June 29, 2010 at 12:51 PM

I know Ed mentioned the market being down 200pts today, however, he did not give any meat to that figure. The DOW broke through support of 10,000 this is the third retest of 10,000 and it has failed to find the support so far. which form a stock market sense means that 10,000 will become resistence if the DOW stays below 10,000 by end of day.

this also means the likelihood of DOW retesting 6,000 has just increased in magnitude.

This does not look good. In fact it is very very bad.

unseen on June 29, 2010 at 12:05 PM

This may be a little bit of conspiracy thinking, but I don’t think the Dow was above 10,000 for any reason except for manipulation.

I mean I how in the world does the Dow close down 300 one week and close up 400 the next? To me it’s too obvious. Nothing in the economy has changed dramatically to make the Dow stay above 10,000. I know there are some gullible people out there, but the people that truly have the power to move the markets are not fooled about anything.

I think there is a more powerful person/entity that has been keeping the markets up, however now people are starting to wake up and they aren’t falling for the rising markets so then everyone sells and the market falls. I know the likes of Soros and Goldman Sachs are powerful and probably have a very large influence on the markets, but when everyone wakes up, even they aren’t big enough to hold off the avalanche off the cliff.

MobileVideoEngineer on June 29, 2010 at 12:52 PM

We were looking at Boats – but if fuel prices are going to rise because of Tax’s — why bother …

wheels on June 29, 2010 at 12:55 PM

The radical left must be completely discredited by November.

faraway on June 29, 2010 at 11:41 AM

They lead in the polls for the House and Obama is close to 50%. Never, ever underestimate the stupidity of the American voter.

angryed on June 29, 2010 at 12:57 PM

The Nancy Pelosi Recession started in the spring of 2007, and its not ending until the GOP takes away the gavel…

phreshone on June 29, 2010 at 1:03 PM

Obama/Peloski/Reid have created such uncertainty and fear about what they’re going to do – not just Obamacare, but Cap and Trade and everything else – that most business owners/managers are hunkering down.

LarryD on June 29, 2010 at 12:46 PM

It’s not just businesses. I have cash in the bank and would like to go out and buy a new car or a boat or a top of the line 60″ TV. But I’m not doing so because I have no idea what is going to happen and I’d rather keep the money safe (as safe as a US bank can be these days).

This is the conundrum of the economy. People like me aren’t spending because we don’t want to. And the “howmuchamonthisit” crowd isn’t spending because lenders no longer lend out money to people who can’t pay it back.

angryed on June 29, 2010 at 1:05 PM

I should add that many of those employed where I work are and have been seeking other employment but can’t find anything else. It is why they will put up with the fewer hours and the greater work load.

No one with a job is going to quit and that makes them vulnerable to this increase in duties and decrease in hours.

Jvette on June 29, 2010 at 1:06 PM

The radical left must be completely discredited by November.

faraway on June 29, 2010 at 11:41 AM

I once that that as well, but too many Americans are thoroughly convinced that Liberalism is smart, logical, and altruistic compared to money-grubbing, Bible-thumping, rednecky, Fascistic Conservatism. Most will blame Bush and the Republicans and the bankers no matter how bad things get.

These people would rather feel intellectually and morally superior even if they are starving and homeless. Just look at how many out there still think that Carter and Clinton were wonderful presidents…need I say more?

Dr. ZhivBlago on June 29, 2010 at 1:09 PM

This parallels the Great Depression, where Roosevelt’s administration kept changing the rules every year, people couldn’t plan for the future, only adapt to an ever changing present.

LarryD on June 29, 2010 at 12:46 PM

and thus why the government should stay the hell out of it and allow the free market to self correct

unseen on June 29, 2010 at 1:10 PM

Recovery Summer

This phrase will come back to haunt the Democrats come November.

GarandFan on June 29, 2010 at 1:14 PM

MobileVideoEngineer on June 29, 2010 at 12:52 PM

the people in power know the levels of support as well as us. they have a reason to buy more around the support levels. Add in that most of Tarp went into the stock market and bond market and there are many special interests that want to keep the DOW at 10,000 they will be able to do that as long as the majority of people believe what that are saying. Once the truth gets out and everyone panics and sells the elites can not keep it up. Most of the up days have been on low volume while the down days are high volume which tells you that wall street is trying to paint the tape to some extent.

reality tends to smooth those bumps out and the market forces up end swamping those that try to paint the tape over the long run

unseen on June 29, 2010 at 1:15 PM

It’s not just businesses. I have cash in the bank and would like to go out and buy a new car or a boat or a top of the line 60″ TV. But I’m not doing so because I have no idea what is going to happen and I’d rather keep the money safe (as safe as a US bank can be these days).

This is the conundrum of the economy. People like me aren’t spending because we don’t want to. And the “howmuchamonthisit” crowd isn’t spending because lenders no longer lend out money to people who can’t pay it back.

angryed on June 29, 2010 at 1:05 PM

Well a lot of the “howmuchamonthisit” crowd are waking up and starting to see that the how much a month is it mentality is not the right way to go anymore.

Like I bought furniture for my house and put it on a payment plan because I just moved and just started this job that I’m at now. Well the last payment is in September and I’m not buying anything on credit ever again.

I bought a new 40″ LCD tv around Christmas and while I wanted the top of the line I settled for the $500 one because I had a 3 year old 26″ Samsung LCD and anything would be better than what I had and I’d rather have a cushion just in case something happens.

I’m only 27, I’ve only had 2 “real” jobs, and my wife is 23 and going to school, so I don’t have the disposable income that others on here have, but I have enough that if I wanted to spend I could, but I’m not.

MobileVideoEngineer on June 29, 2010 at 1:16 PM

This is the conundrum of the economy. People like me aren’t spending because we don’t want to. And the “howmuchamonthisit” crowd isn’t spending because lenders no longer lend out money to people who can’t pay it back.

angryed on June 29, 2010 at 1:05 PM

agreed and good point. I need a new car, a new central AC, a new laptop and I would like a new desktop. Yet I am fixing the car, bought a couple small window A/C units doing without a laptop and upgarding my desktop. All because I do not want to go into debt or touch my savings. And until I know the economy is better and my job is safe i will not.

unseen on June 29, 2010 at 1:19 PM

I’m only 27, I’ve only had 2 “real” jobs, and my wife is 23 and going to school, so I don’t have the disposable income that others on here have, but I have enough that if I wanted to spend I could, but I’m not.

MobileVideoEngineer on June 29, 2010 at 1:16 PM

That is refreshing to hear. But sadly I think you are in the minority….not in the minority of HA readers, but of the population as a whole. And that is why the Socialists still get 50% of the vote. For deadbeats, voting “D” is easier than saving and/or working.

angryed on June 29, 2010 at 1:26 PM

UNPRECEDENTED GROWTH LMAO!!!!!
http://news.yahoo.com/s/afp/20100629/ts_afp/useconomyobama_20100629170100

Obama: US economy ‘strengthening’ despite weak data

Seriously this guy really thinks we’re stupid!!!!

xler8bmw on June 29, 2010 at 1:30 PM

U.S. Has Paid $1.44 Million for Project That is Studying the ‘Social Milieu’ of Male Prostitutes in Ho Chi Minh City and Hanoi

Money spent well sar/

xler8bmw on June 29, 2010 at 1:34 PM

Seriously this guy really thinks we’re stupid!!!!

xler8bmw on June 29, 2010 at 1:30 PM

All part of the plan. Most smart people understand what is going on. some are on Obama’s side and try to muddy the waters for those that are not paying attention, are not smart enough to understand economics, or those that want to feel ok about being on the government dole.

this is why the GOP must fight back with the truth. In the vaccumm created by the GOP leaving the field the dems were allowed to set the narriative.

You can’t win if you don’t play and the GOP elites stopped playing many years ago.

unseen on June 29, 2010 at 1:37 PM

I find this ten percent drop very unexpected. I never expected the confidence level to get above fifty percent this year.

burt on June 29, 2010 at 1:49 PM

Are stores even hiring people this summer? I have to admit I havn’t been in a dept. store in months.

Cookies Mom on June 29, 2010 at 11:53 AM

In a word: no.

They often proudly proclaim things like ‘now accepting applications’…but what they never add is ‘and throwing them in the garbage bin the moment you walk out the door’.

I could show you a dozen businesses within a 5-minute walk of my house that have big banners proclaiming job opportunities. Their banners as well as any promises for callbacks/interviews aren’t worth a fart in a bucket.

Like the one poster said: everybody’s running scared now. The economic and legal instability have everyone sweating bullets. Only the biggest chains like McDonalds and Wal-Mart aren’t afraid…my cynical sense says such companies are dreaming of a corporate oligopoly when all the small- and mid-size businesses fall apart.

Dark-Star on June 29, 2010 at 3:04 PM

Instead of Recovery Summer, it looks more like Midterm Malaise.

Biden, Stark et Obama will spin it into a ‘win’.

Hope ‘n Change we can all believe in…were it not so drastic it would certainly be hilarious.

Schadenfreude on June 29, 2010 at 4:48 PM

How much further down can it go? Mine’s been down in the sewer for more than 2 years now. For my consumer confidence to go lower I’d have to stop buying toilet paper.

J.E. Dyer on June 29, 2010 at 6:52 PM

I am in spending lockdown; my personal confidence level remains VERY LOW…

Khun Joe on June 29, 2010 at 9:17 PM

Keep voting democrat!

Inanemergencydial on June 29, 2010 at 10:20 PM

Hey Pinnochio is givin a comprehensive immigration reform speech on Thursday. That should really help the consumer confidence, housing market, stock market, unemployment, oil crisis, war in Afghanistan, O Bite Me’s problem with smartasses, Pinnochio’s smelly feet and Michelles wide hips!

Hey!

Well they evidently think it will help democrap unenployment!

Gird yer loins and lock and load if these clowns push this and think they are gonna get away with givin 30 million illegals voting rights I think we may need to exercise our newly authorized second amendment rights.
ANTI-AMERICAN ENENIES DOMESTIC, IMPEACH THIS AMERICA HATER!

dhunter on June 29, 2010 at 10:47 PM

I know I haven’t been spending hardly anything extra. Things are too tight now. Too many home repairs (AC and foundation repair) with an auto repair looming (AC broke) and a cut in pay at work as I had to change shifts due to medical reasons. Every dollar I pay down on my charge card I think I add about 5 to it. I hope something changes soon because I’m hurting right now.

If only I had a printing press like the U.S. Govt…….

Yakko77 on June 29, 2010 at 11:22 PM

Kartik Athreya, senior economist for the Richmond Fed, has written a paper condemning economic bloggers as chronically stupid and a threat to public order.

Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).

“Economics is hard. Really hard. You just won’t believe how vastly hugely mind-boggingly hard it is. I mean you may think doing the Sunday Times crossword is difficult, but that’s just peanuts to economics. And because it is so hard, people shouldn’t blithely go shooting their mouths off about it, and pretending like it’s so easy. In fact, we would all be better off if we just ignored these clowns.”

J_Crater on June 30, 2010 at 7:43 AM

We have 10% unemployment and he cancelled 2,000 car dealers.
Now Obama can’t understand why car sales are low. He has nno idea. Gasolene is up a dollar a gallon since the flash from Chicago appeared.

seven on June 30, 2010 at 4:15 PM

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