The Conference Board's July Consumer Confidence report released earlier today threw a heavy dose of cold water on the idea that the economy might finally achieve a broad-based, genuine recovery this year.
Despite month after month of "all is well" reporting — and excuse-making when all hasn't been well — from the U.S. business press, the American public has apparently finally figured out that all is far from well. July's overall reading of 90.9 was 8.9 points lower than June's 99.8, the biggest single-month drop in almost four years — something Reuters and Bloomberg News noted, but which, as would be expected, the Associated Press, the nation's de facto news gatekeeper, failed to report.
The Conference Board did its part to engage in pathetic window dressing (bolds are mine throughout this post):
Overall, the Index remains at levels associated with an expanding economy and a relatively confident consumer.
While the current situation is still fairly high, only falling from 110.3 to 107.4, the Expectations Index tanked, falling from 92.8 to 79.9. That reflects a serious loss of confidence.
Bloomberg, while treating us to yet another "U-Word" sighting ("unexpectedly"), uniquely noted something else:
Consumer Confidence in U.S. Drops by Most Since August 2011
U.S. July Consumer Confidence Unexpectedly Falls to 90.9Consumer confidence slumped in July by the most since August 2011 as Americans grew less upbeat about prospects for the economy, employment and their finances.
The Conference Board’s index retreated to 90.9 from June’s 99.8 that was weaker than initially reported, the New York-based private research group said Tuesday. The July reading was lower than the most pessimistic forecast in a Bloomberg survey of economists.
Worker pay increases that barely exceed inflation are limiting household sentiment about their financial situations, indicating consumers may be less inclined to splurge. Swings in stock prices stemming from the Greek financial crisis and weakness in China are also taking a toll on Americans’ attitudes, the Conference Board said.
... The July reading was the weakest in 10 months. It also marked the biggest negative surprise since February 2003. The Bloomberg survey median called for a decline to 100, with estimates ranging from 97 to 103 after a previously reported June reading of 101.4.
Both Reuters and the AP were ready with excuses, of course unrelated to the awful economic policies and practices coming out of Washington and the Obama administration.
Reuters found someone who thinks this month's result is an "aberration":
Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania, said the slump in confidence likely reflected recent upheavals in the global economy.
"This seems to be an aberration," he said. "Consumers were probably freaked out by the problems in Greece and the Chinese stock market, and the volatility on Wall Street."
If there's evidence that any of those problems are going away instead of being papered over, Ryan, I'd love to see it.
Paul Wiseman at the Associated Press also found an optimist:
Adam Collins, an economist with Capital Economics, said the dip in confidence also reflects higher gasoline prices in recent months; prices hit bottom at $2.03 a gallon in late January and have since rebounded to $2.70 a gallon, according to AAA. Consumer caution may reduce spending to an annual growth rate of 2 percent in the July-September period from the 2.7 percent forecast for the April-June period, Collins said in a research note.He predicted their mood will improve. "With the labor market likely to strengthen further, wage growth poised to accelerate and the recent fall in oil prices suggesting gasoline prices may start to decline again," he wrote, "confidence should rebound soon." He expects consumption growth should then rise back toward 3 percent.
We've been hearing that "wage growth will accelerate" for years now, and it hasn't happened. Why is it going to start happening now? Please, with all the workers on the sidelines, don't argue that the official unemployment rate is finally low enough. A genuinely calculated unemployment rate would indicate that we're nowhere near the point of employers having to up the ante to recruit or keep workers.
Oh, and in case anyone is wondering (at this point, they shouldn't be), the last name of President Barack Obama is not present in any of the three business wires' writeups.
Cross-ppsted at BizzyBlog.com.
