Courtesy of Mish.
Economists Shocked
Economists were shocked by the plunge in the Conference Board Consumer Confidence Index this morning, well below the any economist’s guess in Bloomberg’s Econoday Forecast.
The consensus estimate was 99.6. The consensus range was 97.0 to 102.0. And the actual result … 90.9.
Consumer confidence has weakened substantially this month, to 90.9 which is more than 6 points below Econoday’s low estimate. Weakness is centered in the expectations component which is down nearly 13 points to 79.9 and reflects sudden pessimism in the jobs outlook where an unusually large percentage, at 20 percent even, see fewer jobs opening up six months from now.
A striking negative in the report is a drop in buying plans for autos which confirms weakness elsewhere in the report. Inflation expectations are steady at 5.1 percent which is soft for this reading.
Survey Methodology
How many people does the conference board survey each month? The answer is 3,000. Supposedly that’s all it takes to determine car sales, job prospects, economic slowing, home purchases, etc.
Bloomberg reports “While the level of consumer confidence is associated with consumer spending, the two do not move in tandem each and every month.”
I will return to that idea in a bit. But first let’s take a look at what others say.
Risk for the Economy
Please consider Plunge in Consumer Confidence Exposes Risk for U.S. Economy.
“A less optimistic outlook for the labor market, and perhaps the uncertainty and volatility in financial markets prompted by the situation in Greece and China, appears to have shaken consumers’ confidence,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement.
Really? US consumers care about the Chinese stock market and Greece? Since when?…
