Rasmussen: Investor confidence hits 2010 low

This comes as no surprise, considering the recent news of economic indicators.  In fact, if one compares Rasmussen’s rolling dailyinvestor-confidence measure to the monthly averages, today’s confidence level is the lowest since July of last year:

The Rasmussen Investor Index, which measures the economic confidence of investors on a daily basis, [fell] six points on Friday to its lowest level of 2010. At 77.5, investor confidence is down seven points from the beginning of the year and down twenty-eight points from the 2010 high water mark reached in May.

Investor confidence hasn’t been this low since July 28, 2009.

The Rasmussen Consumer Index, which measures the economic confidence of consumers on a daily basis, dropped three points on Friday, falling to its lowest reading since January 15. At 72.8, the Consumer Index is down five points from the beginning of the year and is now just one point above the 2010 low.

Among all adults nationwide, just 9% rate the economy as good or excellent, down three points from the beginning of the year. A quarter (23%) of adults feel economic conditions in the country are getting better, an eight point decline since the year began.

Among investors, 9% rate the economy as good or excellent and 26% believe the economy is getting better. Fifty-five percent (55%) of investors believe the economy is getting worse.

The monthly numbers were heading down anyway over the last couple of months, so this isn’t a reversal as much as it is an amplification.  Overall confidence peaked in May at 84.1 and fell in June to 80.6.  Even the 77.5 from which the indicator fell would have put us between February and March for investor confidence, which was just as optimism over the 2009Q4 number had started to rise, and people assumed a recovery was underway.

Now that assumption is under serious challenge, and today’s news on the wholesale front is likely to decrease confidence even further:

Inventories held by wholesalers rose for a fifth consecutive month in May but sales fell for the first time in more than a year, sending a mixed signal about the strength of the recovery.

Wholesale inventories increased 0.5 percent while sales dropped 0.3 percent, the Commerce Department said Friday. It was the first decline for sales since March of 2009.

The May sales decline is the latest sign that the economic recovery could be losing momentum as it enters the second half of this year. Weakness in sales could discourage businesses from boosting their orders. That would translate into a slowdown in factory production.

The decline in wholesale sales reflects the pullback from consumers as well as a lack of confidence from retailers.  As the AP reports, higher inventories combined with a sales decline will mean a reduction in factory orders, perhaps for a while, until wholesalers feel comfortable in the level of sales again.  That means even more discounting by retailers later this year, which will eat into profits and perhaps make a few struggling retailers unable to keep up with competition.

We’re seeing the decline of effects from certain short-term stimuli and perhaps the end of irrational optimism over the direction of the economy.  Consumers will go back to saving money rather than spending it, which is going to make for a bumpy ride in 2010 and perhaps into 2011.

Blowback