Consumer, business confidence falls in September

posted at 1:40 pm on September 28, 2010 by Ed Morrissey

Two indicators of economic confidence announced today both show increasing pessimism about the future of the American economy.  Consumers have even less confidence than they did in August, when a downbeat report put a further damper on the Obama administration’s “Recovery Summer” public-relations spin.  In the other, the business outlook from CEOs predicts lower growth, although perhaps a glimmer of hope on capital investments.

First, consumer confidence fell to 48.5 from 53.2, as Reuters expected it to slide only to 52.5, dropping to a low not seen since February:

Americans’ view of the economy turned grimmer in September amid escalating job worries, falling to the lowest point since February.

The downbeat report, released Tuesday, raises more fears about the tenuous U.S. economic recovery. It also further underscores the disconnect between Wall Street and Main Street; consumers’ confidence fell further even as stocks rebounded in September.

The Conference Board, based in New York, said its monthly ConsumerConfidence Index now stands at 48.5, down from the revised 53.2 in August. Economists surveyed by Thomson Reuters were expecting 52.5.

The reading marked the lowest point since February’s 46.4. It takes a reading of 90 to indicate a healthy economy — a level not approached since the recession began in December 2007.

The AP includes this curious analysis:

Fears had been easing that the economy isn’t heading toward a double-dip recession amid a fresh batch of economic reports. While companies aren’t making lots of job offers, far fewer people are applying for unemployment, according to the latest figures from the Labor Department. And the nation’s trade deficit narrowed in July, due to a bigger appetite overseas for American exports.

There are a couple of problems in these assertions.  Applications for unemployment are not “far fewer” in the “latest figures” from Labor — not unless the comparison is to figures from over a year ago.  Initial jobless claims have remained stuck in a narrow, high band of values all year long.  In fact, it was just less than two months ago that the number of initial jobless claims hit a six-month high.  Also, the figures for American exports did improve in July, but only from a pretty awful June report.

Those reasons could explain why CEOs have such a bleak outlook on the economy.  And that matters because …:

U.S. chief executive officers’ view of the economy darkened in the third quarter, breaking a five-quarter streak of improvement and turning corporate America more cautious on hiring [emphasis mine -- Ed].

The number of CEOs who expect their companies’ sales and U.S. headcount to rise over the next six months declined in September, a Business Roundtable survey released on Tuesday found. More bosses expect to boost their capital spending, however, reflecting many companies’ cash-rich balance sheets. …

The Business Roundtable’s CEO Economic Outlook Index declined to 86 in September from 94.6 in June, but remained well above the 50 mark, which separates forecasts of growth from expectations of decline. The CEOs’ view is still markedly improved from early 2009, when the index stood at a record low of negative 5.

The CEOs’ forecast of 2010 economic growth dropped sharply to 1.9 percent from a prediction of 2.7 percent in June.

A GDP of 1.9% for the year means that the CEOs expect two very poor quarters to finish out the year.  The annualized GDP rate in Q1 was reported at 3.7%, followed by an anemic 1.6% in Q2, which would average out to the mid-2s thus far.  It appears that these business leaders expect the kind of growth seen in “Recovery Summer” for the rest of 2010, or perhaps just a little bit less.  That’s nowhere near the kind of growth that creates opportunities for expansion and growth, which means we’ll see this level of stagnation and unemployment continuing well into 2011, if not longer.

That may not be a double-dip recession, but it’s no Recovery Summer, either.

Note: The front-page image comes from this editorial cartoon by Michael Ramirez of Investors Business Daily. Ramirez has a terrific collection of his works: Everyone Has the Right to My Opinion, which covers the entire breadth of Ramirez’ career, and it gives fascinating look at political history.  Read my review here, and watch my interviews with Ramirez here and here.  And don’t forget to check out the entire Investors.com site, which has now incorporated all of the former IBD Editorials, while individual investors still exist.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Unexpected.

The Mega Independent on September 28, 2010 at 1:42 PM

September Deception/Perception!

canopfor on September 28, 2010 at 1:45 PM

And with uncertainty over taxes & regulations — especially healthcare ones, the dismal economy will continue.

rbj on September 28, 2010 at 1:46 PM

You keep thinking……..eventually the Economy will come back on it’s own. But these aren’t ordinary times and we’re not dealing with traditional Administration practice here.

Purposeful or not………..it’s going to get uglier before it gets better (if we even have a free election, and a real CHOICE between what the Progressives in the Dem and Repub parties give us).

DOTUS in charge
And a livin’ large
He’s in the mood
To clear out the neighborhood
All the Capitalists got ta go
Cause him and FLOTUS got ta get to that Broadway show.

PappyD61 on September 28, 2010 at 1:49 PM

My outlook will be considerably brighter after November, hopefully and changefully.

Democrats getting thrown out on their worthless asses, puts a spring in my step.

NoDonkey on September 28, 2010 at 1:51 PM

Meanwhile………………………………………

The snoops are coming: Obama wants a back door to our social media

By: Andrew Ian Dodge
Special to The Examiner
09/28/10 1:31 PM EDT

Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/blogs/Examiner-Opinion-Zone/The-snoops-are-coming-Obama-wants-a-back-door-to-our-social-media-like-facebook-twitter-and-skype-103940169.html#ixzz10qd4Oz44

canopfor on September 28, 2010 at 1:53 PM

“Why are you ingrates so apathetic?” — I am the president

Schadenfreude on September 28, 2010 at 1:54 PM

My outlook will be considerably brighter after November, hopefully and changefully.

Democrats getting thrown out on their worthless asses, puts a spring in my step.

NoDonkey on September 28, 2010 at 1:51 PM

I’m a little worried about what they might do between being voted out and being thrown out.

Tommy_G on September 28, 2010 at 1:55 PM

DOTUS in charge

PappyD61 on September 28, 2010 at 1:49 PM

PappyD61 on September:Me likey, *5 Stars!:)

canopfor on September 28, 2010 at 1:56 PM

Obama’s boys are going home now because the trillions in theft and the destruction are about to be laid bare at America’s feet. No hope, lots of change.

RalphyBoy on September 28, 2010 at 1:56 PM

Free fallin

faraway on September 28, 2010 at 1:56 PM

When are they just going to say we are in a “mini” depression?

upinak on September 28, 2010 at 1:57 PM

That may not be a double-dip recession, but it’s no Recovery Summer, either.

It’s a flatline. Remember the lefties saying “unemployment is a lagging indicator etc” about a year ago when the economy was allegedly in recovery. And most thinking people we’re saying, “well, this time is different due to all the government intervention. Don’t expect this to follow the old models of decline and sharp recovery.”

Well, we were right. All the massive government spending and changing of rules has put us in a very long term flat line funk. They called it a “depression” in the 1930′s, and that’s what it is now.

forest on September 28, 2010 at 2:00 PM

How is a debt-saturated economy supposed to grow without taking on even more debt? We won’t grow without debt, but Americans show no appetite for additional debt. In fact, we’re doing the responsible thing, we’re deleveraging. We won’t see real growth again until personal debt is back to levels consumers can handle. And who in their right mind takes on new debt in this uncertain environment?

If you go to the U.S. National Debt Clock you can watch the personal debt tumble in real time. At the same time, government debt grows like mad.

flyfisher on September 28, 2010 at 2:01 PM

Not only does the AP have some curious language, but they apparently sanitized an earlier release.

Is there anything the MSM won’t do to try and influence the coming election? Or protect their Keynesian-in-Chief?

BKeyser on September 28, 2010 at 2:02 PM

One facet of this “cash-rich balance sheet” meme not discussed much is the fear of the unknown regarding financial regulation, potential cap-n-tax regulation and Obamacare.

Although Obamacare and the financial bill have passed, there is still a ton of unknowns on how these laws will be enforced and implemented. Many of these unknowns will eventually become “knowns” through the rules making process.

Several CFO’s I have talked with say they in addition to hoarding cash for obvious reasons, they fear the eventual rules may cause them to set aside provisions for future liabilities. So, they hoard the cash for the eventual increase in liabilities and hit against equity.

I also don’t buy into the stronger capital deployment theme. Although some companies are using some of their strong cash position for opportunity acquisitions, many others are simply saving for a rainy day.

BacaDog on September 28, 2010 at 2:03 PM

Rush has been reading articles about the Fed buying stocks to keep the market up.

Cindy Munford on September 28, 2010 at 2:03 PM

Yes, but was this unexpected?

rightside on September 28, 2010 at 2:05 PM

Free fallin

faraway on September 28, 2010 at 1:56 PM

faraway:If you insist:)
================================================

Tom Petty – Free Falling – Official Music Video

http://www.youtube.com/watch?v=5gqT6En2O78&feature=related

canopfor on September 28, 2010 at 2:05 PM

The only GDP growth we are going to get will be from the Fed injecting money into the economy; a.k.a. quantitative easing, by buying US Treasuries, also known as inflation, also known as monetizing the US debt.

Meanwhile more layoffs from NASA, financial firms on Wall Street, government and non profits laying off because of budget deficits and end to federal bail out money.

There is no ‘upside’ to this economy except for inflation.

Skandia Recluse on September 28, 2010 at 2:07 PM

Rush has been reading articles about the Fed buying stocks to keep the market up.

Cindy Munford on September 28, 2010 at 2:03 PM

Cindy Munford: Yup,heard it too,sounds like propping it
up,if thats even possible!:)

canopfor on September 28, 2010 at 2:07 PM

Two (relatively) new photoshops indicating first: the Democrat’s Fiscal Roulette Wheel, and second: Obama’s latest fiscal plan.

BKeyser on September 28, 2010 at 2:07 PM

Fed is taking over the capital market!

fossten on September 28, 2010 at 2:12 PM

UNEXPECTEDLY!

Opposite Day on September 28, 2010 at 2:14 PM

“Recovery Summer”: Echoes of WIN (Whip Inflation Now).

Not a Carter Policy, it was Ford’s. But still a failure retread from the top-down Keynesian 70′s.

JeffWeimer on September 28, 2010 at 2:15 PM

Rush has been reading articles about the Fed buying stocks to keep the market up.

Cindy Munford on September 28, 2010 at 2:03 PM

What????

faraway on September 28, 2010 at 2:17 PM

Tommy_G on September 28, 2010 at 1:55 PM

Do juvenile stuff, whine and moan. Call people stupid racists, ungovernable, unworthy of having Democrat overlords.

Same nonsense Democrats always do.

So predictable.

NoDonkey on September 28, 2010 at 2:21 PM

Malaise strikes back.

My collie says:

Buck up, CC. Rebel forces have plans for a counter attack that begins on November 2nd.

CyberCipher on September 28, 2010 at 2:33 PM

You can help the economy today, Iron Man 2 is out on DVD and Blu-Ray.

fourdeucer on September 28, 2010 at 2:34 PM

Oh, and with the winding up of the space shuttle program, there will be even more layoffs.

http://www.reuters.com/article/idUSTRE68Q68020100927

rbj on September 28, 2010 at 2:41 PM

Not fooling anyone.

But I don’t want to go on the cart!!!!

UltimateBob on September 28, 2010 at 2:42 PM

UltimateBob on September 28, 2010 at 2:42 PM

Oh, don’t be such a baby.

NoDonkey on September 28, 2010 at 2:44 PM

How is a debt-saturated economy supposed to grow without taking on even more debt? We won’t grow without debt, but Americans show no appetite for additional debt. In fact, we’re doing the responsible thing, we’re deleveraging. We won’t see real growth again until personal debt is back to levels consumers can handle.

Great points. You’re right, there’s no way out until consumers and businesses have unwound their huge levels of debt. There’s no quick fix and no easy way out. What’s worse is that the deficit is ticking time bomb.

This is a great reminder of what almost everyone learned in Econ 101. Raise taxes and balance the budget when the economy is going full speed (2002-2007). Then lower taxes and use deficit spending when the economy falters. But when you’ve already doubled the national debt and already lowered taxes during the good days, then you have no way out when the economy crashes. Go figure why we’re being out-maneuvered and out-smarted by China.

bayam on September 28, 2010 at 2:44 PM

That may not be a double-dip recession, but it’s no Recovery Summer, either.

.
How could it be a “double-dip” when the recession has been over since June ’09?

mrt721 on September 28, 2010 at 2:46 PM

mrt721 on September 28, 2010 at 2:46 PM

We have two dips who are supposedly leading the country but who instead caused a recession, does that count?

NoDonkey on September 28, 2010 at 2:49 PM

rbj on September 28, 2010 at 2:41 PM

Some of those folks will be able to find jobs in private space companies. Govt spending has got to be cut! Everything has to be on the chopping block. Everything.

txhsmom on September 28, 2010 at 2:56 PM

Malaise strikes back.

My collie says:

Buck up, CC. Rebel forces have plans for a counter attack that begins on November 2nd.
CyberCipher on September 28, 2010 at 2:33 PM

CyberCipher: Yes,the SarahCuda Forces are in position,
and I`m preparing my Canada Geese for turd
dropping Airstrikes at possible Black Panther
Voting Intimidation and Harassessment of Voting
areas!—————————–:)

canopfor on September 28, 2010 at 2:59 PM

it’s no Recovery Summer

My calendar says it’s Recovery Fall now.

Which sums it up.

NoDonkey on September 28, 2010 at 3:02 PM

Obama’s new tag line: Dope and Blame.

When his dopey policies fail, blame Booooooosh!!!!

csdeven on September 28, 2010 at 3:02 PM

Gee, why would everyone think the economy is doing poorly? Might it be that, well it actually IS doing poorly?

No matter how hard Odumbass squints, clicks his heels and says, “There’s no place like Chicago.”

There never was a recovery and the GDP numbers are FAKE just as long as the Fed can manipulate them through spending and changing teh algorithm by which it is computed.

The unemployment numbers are fabricated also, by virtue of the fact the Fed changed the method of collecting and reporting the numbers and by moving unemployed people into catagories they do not wish to count. (Even the U6 number is fudged and incomplete now)

Despite all the bad data, few are fooled. The evidence around us is kinda overwhelming and frightening at the same time. My work is coming to end in a month and I’m a little um, apprehensive about what’s gonna happen. There’s no work.

dogsoldier on September 28, 2010 at 3:06 PM

Remember when things were so screwed up back in the Dhimmi Carter years that they had to invent a new word to describe how screwed up it was: “stagfaltion”

I think we’re going to have to come up with another new word for Obama’s economy.

forest on September 28, 2010 at 3:16 PM

Is there anything the MSM won’t do to try and influence the coming election?
BKeyser on September 28, 2010 at 2:02 PM

Nope. You ain’t seen nuthin like the October surprises coming our way.

rrpjr on September 28, 2010 at 3:27 PM

fears = hope at the AP

tarpon on September 28, 2010 at 3:32 PM

Will someone explain to me why the stock market keeps going up?
Seriously. Is it because the markets think the democratic socialist party will lose in November, or is the market being manipulated? Or what?

And what is all this about the Feds buying stocks? Something is rotten here, and it ain’t Shinola.

Dhuka on September 28, 2010 at 4:18 PM

Rush has been reading articles about the Fed buying stocks to keep the market up.

Cindy Munford on September 28, 2010 at 2:03 PM

Got sources? That’s downright freaky…that’s exactly what happened the last time before a major crash.

Dark-Star on September 29, 2010 at 10:22 AM