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.