Almost two weeks ago, we got our first hint of faith-based economics when we learned that Larry Summers’ favorite economic indicator was checking Google Trends to see how “economic depression” rated. With that kind of high-level analysis keeping Barack Obama’s chief economist busy, I’m sure he missed the latest report on consumer confidence. After rising sharply on promises of a “jolt” to the economy from Porkulus, it has now declined sharply for the second month in a row:
Americans’ confidence in the economy darkened further in July as worries about job security offset any enthusiasm about the resumed stock market rally that has helped bolster retirement accounts.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index, which retreated last month, fell to 46.6, down from 49.3 in June. Economists surveyed by Thomson Reuters were expecting a reading of 49. It would take a reading above 90 to signal that the economy is on solid footing.
The second straight month of decline follows an upswing in confidence this past spring fueled by a stock market rally and some signs that the economy was improving.
Why so gloomy?
“Consumer confidence, which had rebounded strongly in late spring, has faded in the last two months,” Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.
She noted that the decline in the Present Situation Index was caused primarily by a worsening job market. The deteriorating outlook for consumers was “more the result of an increase in the proportion of consumers expecting no change in business and labor market conditions.
Call it the Consumer Disillusionment Index. After spending months talking about the “worst economy since the Great Depression,” the Obama administration sold Porkulus as a cure for all ills. They promised that the outlay of $787 billion would “save or create” 3 to 4 million jobs, an impossible metric to prove, and that unemployment would not top 8% — unfortunately for Obama, a metric all to easy to prove. As job losses continued, that burst of optimism following the rollout of Porkulus has disappeared.
Now, consumers have once again concluded that the government has no clue as to what it’s doing, and have declined to spend money in the short term. Franco says the long-term trends bode ill for the rest of the year, too. Most people are pessimistic about their income prospects this year, which means that the downturn is likely to continue.
But don’t worry. Larry Summers is undoubtedly trying to research the latest Google trends, when he’s not reading tarot cards and goat entrails.