Consumer confidence plunged in May, more long-term jobless to be cut loose

posted at 4:41 pm on May 29, 2012 by Ed Morrissey

The news from today’s economic indicators was mostly negative, although one key report may have a silver lining.  CNBC’s Diana Olick reports that the new S&P/Case Shiller report shows that home prices hit a new low in the first quarter, but that signs within the data suggest that we may have finally found a bottom in the market:

All three “headline composites” of the latest and widely watched S&P/Case Shiller home price indices ended the first quarter of 2012 at new post-crisis lows.

But one of the authors of the indices, Robert Shiller, told CNBC Tuesday: “We have encouraging signs in the market, we are seeing some signs of hope.”

His cohort, S&P’s David Blitzer, agreed. “Digging into the details, it’s a whole lot better than the headlines,” he said in the same interview.

Finally, index co-author Karl Case explained: “We lag, and the indicators for the last three, four months on the quantity side have been real positive, so we look like a bottom. You have to pick to find real negatives.”

I wrote about where the bottom might be found last summer, almost a year ago.  If one relinked housing prices to inflation and accounted for the asset decline in the collapse of the bubble, I figured that the Case Shiller index bottom would be close to 128.1.  That’s about where Q1′s index is now.  Olick notes that construction has perked up a bit in markets like Las Vegas and Phoenix, where the collapse hit home values hardest and where inventories have finally declined to rational levels, or at least approaching them.

Unfortunately, other economic indicators out today suggest that demand may not pick up again soon, in housing markets or other areas.  Consumer confidence in May suffered the biggest drop in eight months, going the opposite directions economists expected:

Americans confidence in the economy suffered the biggest drop in eight months as worries about the weak jobs, housing and stock markets rattled them again. The decline comes after a few months of optimism amid some positive economic news.

The Conference Board, a private research group, said on Tuesday that its Consumer Confidence Index now stands at 64.9, down from a revised 68.7 in April. With gas prices falling, Americans were expected to push the measure to 70, according to analysts polled by FactSet.

But the May figure, which represents the biggest drop since October 2011 when the measure fell about 6 points, shows that consumers need more encouraging economic signs before their concerns start to dissipate. Americans remain worried about slow hiring, declining home values, big drops in the stock market and a worsening European economy that they fear will negatively impact the U.S.

“Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook,” said Lynn Franco, director of economic indicators at The Conference Board.

On top of that, the New York Times reports that hundreds of thousands of people currently on jobless benefits will lose those subsidies soon.  It’s unclear if this is separate from reports last month of the same issue, or merely an extension of the same data.  Either way, it will mean lower consumer spending and more people dropping completely out of the workforce figures.

CNBC’s Patti Domm warns that June will be a turning point for the economy:

There are many worries, but there are three main themes where investors are focused.

The first is Greece and fears a sloppy euro exit would trigger a breakdown of the euro zone. The Chinese economy and the ability of leaders there to engineer a soft landing is also a major concern.

And finally, the idea that the U.S. economy, on its shaky road to recovery, could be derailed by outside forces makes for heightened interest in U.S. data and also in the doings of the Federal Reserve, which holds an important meeting June 19 and 20.

If the consumer confidence numbers are any indication, that turning point may have already arrived.


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unElect 0bama…

OmahaConservative on May 29, 2012 at 4:44 PM

The news from today’s economic indicators was mostly negative

Captain Renualt to the white courtesy phone please…

SWalker on May 29, 2012 at 4:45 PM

On top of that, the New York Times reports that hundreds of thousands of people currently on jobless benefits will lose those subsidies soon. …Either way, it will mean lower consumer spending and more people dropping completely out of the workforce figures.

Good news for little Bammie’s reelection!

slickwillie2001 on May 29, 2012 at 4:46 PM

Given the crises looming in Greece and Spain, a double dip in the UK and other austerity-leaning EU countries, and weak economic indicators coming out of China, there’s little reason to expect strong demand for US products abroad. But corporate profits will remain strong, so the stock market may yet again be the one bright spot.

bayam on May 29, 2012 at 4:46 PM

But naturally, the make-believe-media says SCOAMF will win it all in November.

Rixon on May 29, 2012 at 4:46 PM

The good news is that Barry has a campaign to run, so he can’t be wasting as much time screwing up the economy.

NoDonkey on May 29, 2012 at 4:48 PM

“Finally hit bottom…” meh.

BKeyser on May 29, 2012 at 4:48 PM

Dope ‘n Change

Schadenfreude on May 29, 2012 at 4:48 PM

Either way, it will mean… more people dropping completely out of the workforce figures.

Which brings a smile to the faces of the Obama re-election team.

Flora Duh on May 29, 2012 at 4:49 PM

unElect 0bama…

OmahaConservative on May 29, 2012 at 4:44 PM

Won’t be enough. Don’t expect Romney to change things for the better by much.

rickv404 on May 29, 2012 at 4:49 PM

But Obama is doing his part to keep the golfing industry healthy!

search4truth on May 29, 2012 at 4:50 PM

Which brings a smile to the faces of the Obama re-election team.

Flora Duh on May 29, 2012 at 4:49 PM

Yeppers…yet, they think that we wish for the demise of the land.

Schadenfreude on May 29, 2012 at 4:50 PM

I had the INDY 500 on yesterday and so I ended up with the channel on ABC when they had their This WEEK with a democrat journalist show on. I swear they were talking about how consumer confidence was high and as long as that was high that was all that really mattered for Obama’s election.

Also it was interesting to see George Will sitting at the same table as Jennifer Granholm. It is kind of like matter colliding with anti-matter.

earlgrey133 on May 29, 2012 at 4:51 PM

On top of that, the New York Times reports that hundreds of thousands of people currently on jobless benefits will lose those subsidies soon. It’s unclear if this is separate from reports last month of the same issue, or merely an extension of the same data. Either way, it will mean lower consumer spending and more people dropping completely out of the workforce figures.

Which means those hundreds of thousands of long-term unemployed will no longer be counted in Department of Labor statistics.

That means the unemployment rate will probably drop, since those hundreds of thousands no longer factor in the official unemployment rate.

At this pace, 0bamanomics will indeed have the official unemployment rate down below 7% by November 1. The 0bama government and its allies the MSM will trumpet this statistical sleight of hand as good news.

If this bit of accounting magic is not enough to win another four years of HopeAndChange, look for progressives in the MSM and Congress to begin calling for extension and renewal of unemployment benefits for the long-term jobless.

We would then see a dramatic “spike in unemployment” early in President Romney’s first term as those formerly un-counted jobless showed up in the official rate once more. The MSM and Democrats could then get the Hillary 2016 campaign off to a roaring start by citing the “failed economic policies” of the Romney White House.

MidniteRambler on May 29, 2012 at 4:52 PM

Great, now we can get those unemployment numbers down below eight percent. This recovery summer(s) thing is working out just like they drew it up.

antipc on May 29, 2012 at 4:53 PM

Unexpectedly….

ICanSeeNovFromMyHouse on May 29, 2012 at 4:53 PM

Ed,

There is a backlog on unforeclosed properties stretching into the millions. These had been slowed by the robosigning litigation and recent settlement. They are not yet hitting the market, and that “shadow inventory” will depress sales until it is “marked to market” and sold.

Millions, Ed. Millions.

No bottom nearby until that “clears out.”

Count it.

(In memory of the no longer here crr6.)

65droptop on May 29, 2012 at 4:54 PM

What consumer confidence? None out here in SOCAL…

Khun Joe on May 29, 2012 at 4:54 PM

Either way, it will mean… more people dropping completely out of the workforce figures

Well, if we can keep this up the unemployment rate will be 2% in time for the election!!! LOL.

NJ Red on May 29, 2012 at 4:55 PM

The first is Greece and fears a sloppy euro exit would trigger a breakdown of the euro zone.

lol.

Greece? Sloppy exit from the euro? Please.

Expect clinical, clean efficiency. Exactly like you’ve seen up to this point.

Axe on May 29, 2012 at 4:59 PM

But Obama is doing his part to keep the golfing industry healthy!

search4truth on May 29, 2012 at 4:50 PM

Michelle has an even better record. She’s singlehandedly keeping thousands employed in the travel industry all over the world. Michelle’s a one (or is it the Won?) woman economic revival machine for the entire planet. Inspiring, isn’t it?

Gladtobehere on May 29, 2012 at 5:00 PM

No statistic about the increasing disability roles?

GaltBlvnAtty on May 29, 2012 at 5:00 PM

Banks have only been processing about 80,000 foreclosures a month. There is a current backlog of more than 4 1/2 million. As those hit the market housing prices will drop again. We are nowhere close to the bottom of the housing market.

rlyle on May 29, 2012 at 5:02 PM

ohhhhhhhhhhhhh….
.
.
.
it’s the ECONOMY stupid…!!!

KOOLAID2 on May 29, 2012 at 5:03 PM

But perhaps a bottom in the housing market.

The bottom of the housing market will come at some point after all of the inflation and debt financed bailouts and price manipulation comes to an end so the market is allowed to adjust accordingly, IMO. Then when homes are cheaper young people will have more hope for the future as it will be easier for them to buy a decent home without taking out an irresponsible, high leverage loan for an overpriced house.

FloatingRock on May 29, 2012 at 5:04 PM

…the trolls are beating a path to this thread!

KOOLAID2 on May 29, 2012 at 5:04 PM

Then when homes are cheaper young people will have more hope for the future as it will be easier for them to buy a decent home without taking out an irresponsible, high leverage loan for an overpriced house.

FloatingRock on May 29, 2012 at 5:04 PM

Unfortunately many young people are loaded down with student debt and bad job prospects. They can’t afford even a cheap home. Meanwhile the economy is still in a bubble brought about by lots of deficit spending and money printing. Until that’s reduced, no bottom. I don’t know how long this can go on, but the end won’t be pretty.

Gladtobehere on May 29, 2012 at 5:10 PM

Bye bye Obama

Conservative4ev on May 29, 2012 at 5:13 PM

The Conference Board report contradicts last week’s University of Michigan consumer confidence survey, which showed the index at a 4-year high. More importantly, consumer spending continues to be steady, although not spectacular. All of which supports the “slow but steady” climb-out theory; as for housing prices, the bottom may have been reached, but the market will still take some time to recover. We are looking for the next piece of the puzzle: Job growth of perhaps 150K this Friday, which would confirm that the slowdown in March and April was due to the early hiring spike in January and February.

TouchdownBuddha on May 29, 2012 at 5:15 PM

Ah, but this is before all the Forward ads hit the TVs…just wait for recovering summer part Tres!

kirkill on May 29, 2012 at 5:16 PM

A twig to hang onto

Schadenfreude on May 29, 2012 at 5:17 PM

earlgrey133 on May 29, 2012 at 4:51 PM

Sports, that’s how I “accidentally” see the dinosaur media on occasion too…

kirkill on May 29, 2012 at 5:22 PM

Ah, but this is before all the Forward ads hit the TVs…just wait for recovering summer part Tres!

kirkill on May 29, 2012 at 5:16 PM

I will be sticking with the Snow White and the Huntsman ads. I am pretty sure the acting is better, and there’s this evil blonde bombshell that reminds me of my dream girl, who is also both blonde and evil.

Besides, “Forward” in this context would be rhetorically proximate to watching a line of people being whipped off a cliff. So they should go ahead with those.

Bye bye Obama

Conservative4ev on May 29, 2012 at 5:13 PM

That. :)

Axe on May 29, 2012 at 5:26 PM

Is it me or was HOT AIR more exciting duirng the primaries.

gerry-mittbot-misses the good ole days

gerrym51 on May 29, 2012 at 5:34 PM

On top of that, the New York Times reports that hundreds of thousands of people currently on jobless benefits will lose those subsidies soon. It’s unclear if this is separate from reports last month of the same issue, or merely an extension of the same data.

I believe that’s separate. If memory serves, the earlier report from the Washington Post covered those dropping off EUC 2008 in May, while the NYT report covers those dropping off EUC 2008 in June.

6% U-3 “unemployment”, here we come.

Steve Eggleston on May 29, 2012 at 5:35 PM

There is a backlog on unforeclosed properties stretching into the millions. These had been slowed by the robosigning litigation and recent settlement. They are not yet hitting the market, and that “shadow inventory” will depress sales until it is “marked to market” and sold.

Millions, Ed. Millions.

No bottom nearby until that “clears out.”

Count it.

(In memory of the no longer here crr6.)

65droptop on May 29, 2012 at 4:54 PM

Too Optimistic

Then when homes are cheaper young people will have more hope for the future as it will be easier for them to buy a decent home without taking out an irresponsible, high leverage loan for an overpriced house.

FloatingRock on May 29, 2012 at 5:04 PM

Unfortunately many young people are loaded down with student debt and bad job prospects. They can’t afford even a cheap home. Meanwhile the economy is still in a bubble brought about by lots of deficit spending and money printing. Until that’s reduced, no bottom. I don’t know how long this can go on, but the end won’t be pretty.

Gladtobehere on May 29, 2012 at 5:10 PM


Still too optimistic

The number of foreclosures since the greatest cover up in political history continues to drop. The time period between someone stopping making payments on a mortgage and when they are foreclosed upon continues to go up.

It is time for the Boss Lady to round up her people and all of you to start thinking about what this means. (Hint: the TBTF banks are not the least bit interested in the U.S. housing market finding a bottom)

It is one thing to completely ignore the biggest scandal since Watergate.

It is a on a whole other level to not warn people about the Financial Tsunami Apocalypse after the earthquake has started.

PolAgnostic on May 29, 2012 at 5:42 PM

On top of that, the New York Times reports that hundreds of thousands of people currently on jobless benefits will lose those subsidies soon. It’s unclear if this is separate from reports last month of the same issue, or merely an extension of the same data.

I believe that’s separate. If memory serves, the earlier report from the Washington Post covered those dropping off EUC 2008 in May, while the NYT report covers those dropping off EUC 2008 in June.

6% U-3 “unemployment”, here we come.

Steve Eggleston on May 29, 2012 at 5:35 PM

It’s good to see my memory hasn’t failed me. The WaPo piece had 230,000 losing their super-extended benefits the second week of May.

Steve Eggleston on May 29, 2012 at 5:43 PM

We won’t find the bottom of the housing market until we start adding jobs. It is really as simple as that.

bj1126 on May 29, 2012 at 5:47 PM

June 2009 recovery is just around the corner!!!
June 2010 recovery is just around the corner!!!
June 2011 recovery is just around the corner!!!
June 2012 recovery is just around the corner!!!

THANK YOU president 0bama!!!!111!!!elebinty

jukin3 on May 29, 2012 at 5:56 PM

We won’t find the bottom of the housing market until we start adding jobs. It is really as simple as that.

bj1126 on May 29, 2012 at 5:47 PM

Don’t forget about getting the government (namely, Fannie and Fannie) out of the housing market.

Steve Eggleston on May 29, 2012 at 5:56 PM

Consumers aren’t stupid. The electorate isn’t stupid, either. They have lost what little confidence they had because things are slowly grinding worse. They see it every day. Month after month.

The Emperor’s propaganda machine cannot hide reality. There is no cloaking device he can hide behind.

dogsoldier on May 29, 2012 at 6:18 PM

It’s good to see my memory hasn’t failed me. The WaPo piece had 230,000 losing their super-extended benefits the second week of May.

Steve Eggleston on May 29, 2012 at 5:43 PM

You were correct and I read another 200,000 more by September.

dogsoldier on May 29, 2012 at 6:19 PM

You were correct and I read another 200,000 more by September.

dogsoldier on May 29, 2012 at 6:19 PM

Convenient timing, isn’t it? What are the odds the civilian labor force will drop another 300,000 by October?

Steve Eggleston on May 29, 2012 at 6:27 PM

Don’t forget about getting … Fannie and Fannie … out of the housing market.

Steve Eggleston on May 29, 2012 at 5:56 PM

… too pessimistic?

Axe on May 29, 2012 at 6:29 PM

It is a on a whole other level to not warn people about the Financial Tsunami Apocalypse after the earthquake has started.
PolAgnostic on May 29, 2012 at 5:42 PM

I’m getting really tired of using the phrase “tip of the iceburg” about every catastrophy going on with this administration, but…

Yes, obviously the private home mortgage market “tsunami” is still blissfully offshore. But even that is negligible compared to the Extinction Level Event asteroid that’s about to hit the business real estate market.

logis on May 29, 2012 at 6:35 PM

New York Times reports that hundreds of thousands of people currently on jobless benefits will lose those subsidies soon

HEY! Barry will tout that! “LOOK! Unemployment under 8%!”

GarandFan on May 29, 2012 at 6:43 PM

Axe on May 29, 2012 at 6:29 PM

Nice. I’m trying to be positive here.

Steve Eggleston on May 29, 2012 at 6:51 PM

I have a challenge for Mr. Morrissey:

Select any Metro area in the nation. Go to Zillow.com. Select advanced search. Check off the Foreclosure box, then look at the count. You will be astounded.

Take Dallas Texas. In the for sale category there are 5972 properties in the system. There are 1235 foreclosure properties listed in the system. That is nearly 21% of all the properties available. The Dallas/Fort Worth area was pretty much bypassed by the go-go run up in property values like CA, NV experienced yet 1 out of 5 are foreclosures. And that is what the banks currently have listed to inventory. They have much more to sell. Plus Texas is hiring not flushing jobs left and right like CA.

So you tell me how with that much inventory overhang we are even close to a ‘bottom’ in the real estate market? Like the Boss Ertimus has been quoted here, ‘… with your own eyes.’

Dr. Dog on May 29, 2012 at 6:58 PM

Axe on May 29, 2012 at 6:29 PM

Nice. I’m trying to be positive here.

Steve Eggleston on May 29, 2012 at 6:51 PM

K. I take it back. Feels like looking for a tree in Arabia where a Pheonix lives, but there’s nobility in the search, and … who knows. It could happen.

Axe on May 29, 2012 at 7:02 PM

Gun sales, already strong, are picking up again in the warm up to this election.

And by gun sales I mean everything from parts to ammo.

CorporatePiggy on May 29, 2012 at 7:14 PM

Is it me or was HOT AIR more exciting duirng the primaries.

gerry-mittbot-misses the good ole days

gerrym51 on May 29, 2012 at 5:34 PM

I was thinking this today as I scanned the headlines and went Meh, and jumped over to Drudge to see the latest. HA seems to be lagging.

My opinion is that HA dropped a bit when Tina left.

Maybe HA can fill that gap with someone???

orbitalair on May 29, 2012 at 7:43 PM

Yes, obviously the private home mortgage market “tsunami” is still blissfully offshore. But even that is negligible compared to the Extinction Level Event asteroid that’s about to hit the business real estate market.

logis on May 29, 2012 at 6:35 PM

I don’t even want to watch when that happens.

MelonCollie on May 29, 2012 at 9:07 PM

Yes, obviously the private home mortgage market “tsunami” is still blissfully offshore. But even that is negligible compared to the Extinction Level Event asteroid that’s about to hit the business real estate market.
logis on May 29, 2012 at 6:35 PM

I don’t even want to watch when that happens.
MelonCollie on May 29, 2012 at 9:07 PM

Hehe.

I remember years ago, California was alerted that a tsunami might be hitting their shores. I watched a video where dozens of people flocked to the beach to see the spectacle. But it didn’t materialize.

I remember wondering what was going through their heads. Were they… disappointed?

logis on May 29, 2012 at 9:27 PM

Don’t forget about getting … Fannie and Fannie … out of the housing market.

Steve Eggleston on May 29, 2012 at 5:56 PM

LOL. Being realistic is preferable despite your spin, Mr. Eggleston.

If you really believe that housing has bottomed than I suggest you RE~THINK that belief.

The current “bottom,” and I use that word loosely, in housing appears to have occurred in late 2010. However, we also saw a “bottom” in 2009 as well. With continued support to housing from artificially depressed interest rates, bailouts, write downs, forgiveness, tax credits and incentives and housing data does appear to show a bottom.

The most recent release of April’s data, on the surface, appears to support the media’s proposition that housing is in a continued recovery process. Not so fast. The problem with the April data, on a seasonally adjusted basis, is that this was the warmest April in six years and the second warmest in the past 31 years. The unseasonably warm weather, combined with the lowest amount of precipitation in a decade, has artificially influenced the adjusted data in much the same way as we have previously discussed regarding the employment data. While April did show a rebound it came on the heels of two monthly declines and failed to fully recoup the previous losses. What was worse is that on a non-seasonally adjusted basis this was one of the weakest Aprils in the past decade for existing home sales.

Apart from new and existing home sales the housing starts, permits and completion data does not look much better. Considering these data points are still at the lowest levels since data began to be collected there is very little evidence that a recovery is officially underway. When these data points are combined with new and existing home sales we can argue the case for a housing bottom. However, a bottom and a recovery in housing, as stated previously, are two vastly different things.

In order to really know what is going on in housing we need to look at the proverbial “forest for the trees” by examining what is happening to the total number of houses. We know that many housing units have been converted into rental properties in recent months as excess homes are sitting vacant. As full-time employment remains elusive, a large and available labor pool suppresses wages and access to credit remains tight – the dream of “home ownership” has slipped from the grasp of many Americans. However, as the population continues to expand, “renting” becomes the preferred choice.

Please try and keep in perspective that existing housing pricing must stabilize and recover BEFORE new home building sees an uptick.

DevilsPrinciple on May 30, 2012 at 7:41 AM