News on consumer confidence comes to us from two different sources today. First, via Suitably Flip, the Conference Board’s consumer-confidence measure dropped to 58.5, the lowest level in seven months. Bloomberg reports that analysts are seeing demand dry up and predict a long, unhappy summer, and they skip the happy spin on housing prices that Reuters employed:
Consumer confidence dropped to a seven-month low in June as Americans grew concerned about the outlook for jobs and wages.
The Conference Board’s sentiment index decreased to 58.5 from a revised 61.7 in May that was higher than previously estimated, figures from the New York-based private research group showed today. Home prices fell in the year ended in April by the most in 17 months, another report showed.
Wells Fargo analyst Mark Vitner advises people to get used to this:
“We have a fairly weak economy with little to no job growth,” said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte,North Carolina. “With consumers so worried about their job prospects, I’m not so sure that we can count on demand picking up. The housing market is dead in the water.”
Gallup also released its latest polling data on consumer confidence, and finds that it has dropped below 2010’s somewhat meager expectations:
After surging in May, Americans’ economic confidence receded in early June and remains near its 2011 low, averaging -33 in the week ending June 26. This is down seven percentage points from the week ending May 29 and down a similar amount compared with the same week a year ago.
U.S. economic confidence peaked this year at -18 in February and then generally declined, reaching -39 during week ending April 24, as gas prices surged and economic activity slowed. Confidence increased in May, averaging -26, likely in response to the news of Osama bin Laden’s death in a U.S. military raid.
It’s not the only unpleasant comparison to 2010. A year ago, 36% believed the economy was improving as we headed into Joe Biden’s promised “Recovery Summer.” This year that figure is 31%. The 2011 numbers first dropped slightly below 2010 levels in March and have tracked well below 2010 ever since except for the brief post-bin Laden mission period. More people now rate the economy as “poor” (45%) than a year ago, albeit narrowly (42%).
Consumer spending has outpaced GDP growth this year, although that’s not exactly robust praise. Consumer spending rose a little over 2% in a quarter that got a 1.9% annualized GDP growth rate. As consumer confidence falls, spending will decrease and push the growth numbers even further towards zero or worse. The report already shows fewer consumers planning large-ticket purchases in the next six months on vehicles or appliances. That also will have an impact on job creation; the Conference Board’s percentage of respondents expecting job growth dropped from a pessimistic 16.7% last month to 14.2% now. More than twice as many (38%) expect the stock market to decline, the highest level since March 2009.
Flip calls the economic indicator data dump today “stinky.” It certainly isn’t good news for Barack Obama and his flailing economics team.