We are in what one of my co-workers calls a perfect negative loop, where anemic jobs numbers feed bearish stock market sentiment which loops back and drives consumer confidence lower. The Conference Board provided the latest loop in the chain on Tuesday with the new report on Consumer Confidence numbers for June, which were down to 52.9, a dramatic drop from 62.7 in May. This comes on the heels of a major selloff in world markets overnight, and a Wednesday morning selloff in U.S. stocks that took the Dow below 10,000. As all this unfolded Tuesday morning, President Obama was meeting with Federal Reserve Chairman Ben Bernanke. Good timing, fellas.
The President took the opportunity to remind listeners that the economy, which he said is strengthening, still needs help, specifically in the form of an extension of jobless benefits. He also said that private sector hiring was picking up, and that the manufacturing sector of the economy was on the mend.. Only problem is, the public and the financial markets aren’t buying it at the moment. Such vacillation in consumer and investor sentiment is not unusual but nor should it be dismissed as noise. Here’s the quick take from the analysts at High Frequency Economics:
This is a hefty decline in a single month, but note it did not fully reverse
the total 14.2-point increase over the previous two months. If
sustained at this level, the index would be consistent with real
consumers’ spending rising at a year-over-year pace of 1% or so,
though we should point out that the relationship between the in-
dex and spending can be rather fractious. Still, surveys like
this make it hard to be a consumer bull.