How do voters feel about the economy? Why not ask consumers in general? According to Reuters, consumer confidence dropped sharply to its lowest level in nine months — while its analysts had actually expected an increase:
U.S. consumer confidence unexpectedly weakened in August to its lowest in nine months as Americans turned more pessimistic about the short-term outlook, according to a private sector report released on Tuesday.
The Conference Board, an industry group, said its index of consumer attitudes fell to 60.6 from a downwardly revised 65.4 the month before. Economists had expected an increase to 66, according to a Reuters poll.
It was the lowest level since November. July was originally reported as 65.9.
The biggest decline came in the outlook for the future rather than the present situation. The outlook on job creation was slightly pessimistic as well:
The expectations index tumbled to 70.5 from 78.4, while the present situation index edged down to 45.8 from 45.9.
Consumers’ labor market assessment was mixed. The “jobs hard to get” index eased to 40.7 percent from 41 percent but the “jobs plentiful” index also declined to 7 percent from 7.8 percent.
Last week’s Gallup report showed unemployment increasing in August in both unadjusted and seasonally-adjusted numbers. Both have risen since June, and the survey predicts a BLS number at the end of next week — the morning after Barack Obama formally accepts his party’s nomination — that ticks up to 8.4% unemployment. This could be an indicator that consumers have begun to feel a job contraction, or just that worries have increased about prospects for job creation for the rest of this year.
Needless to say, this comes at a bad time for Obama and his re-election efforts. Falling confidence means that he will need to avoid talking about the economy, which he has all summer long, and which is probably contributing to his slide in the polls. Obama has yet to articulate a second-term economic policy, which by default leaves voters with the impression that they can expect more of the same stagnation Obamanomics has produced over the last three years of “recovery.” Those are the policies which have eroded middle-class incomes by more than $4,000 since Obama took office and down more than $2,500 since June 2009, as the Wall Street Journal reported last week:
In January 2009, the month President Obama entered the Oval Office and shortly before he signed his stimulus spending bill, median household income was $54,983. By June 2012, it had tumbled to $50,964, adjusted for inflation. (See the chart nearby.) That’s $4,019 in lost real income, a little less than a month’s income every year.
Unfair, you say, because Mr. Obama inherited a recession? Well, even if you start the analysis when the recession ended in June 2009, the numbers are dismal. Three years after the economy hit its trough, median household income is down $2,544, or nearly 5%.
Add the authors: “The overall decline since June 2009 was larger than the 2.6 percent decline that occurred” during the recession from December 2007 to June 2009. For household income, in other words, the Obama recovery has been worse than the Bush recession.
Small wonder consumers give Obama’s recovery a vote of no-confidence today. Voters will probably do the same in November, unless Obama starts talking about significant changes to Obamanomics in a second term — which would be a tacit admission of failure, which is why Team Obama spends its time talking about abortion and contraception these days.
Update: Maybe Team Obama will start promoting Rasmussen polls now. Their latest look at consumer confidence reports the exact opposite:
The Rasmussen Consumer Index, which measures consumer confidence on a daily basis, rose five points on Tuesday to 87.6, the highest level measured since July 8. Consumer confidence is up eight points from a week ago, seven points from a month ago, but is still down four points from three months ago.
The Rasmussen Investor Index gained three points on Tuesday. At 91.7, investor confidence is up three points from a week ago, nine points from a month ago, but is down 11 points from three months ago.
Thirty-one percent (31%) of consumers say the U.S. economy is getting better these days, a view shared by 30% of investors. Among consumers, 52% feel economic condition in the country are getting worse, as do 56% of investors.
Well, that’s certainly unexpected.
Update II: Actually, unemployment is already 8.3%, so I changed the reference to a potential increase to 8.4% above.