Consumer Confidence Expectations Soar, Current Confidence in Gutter; Larry Summers Yaps about Second Stimulus
by ilene - May 25th, 2010 4:04 pm
Consumer Confidence Expectations Soar, Current Confidence in Gutter; Larry Summers Yaps about Second Stimulus
Courtesy of Mish
Although the consumer confidence current conditions index remains in the gutter, the expectations index shows increasing optimism. Please consider Consumers Gain Confidence as Employment Improves.
The Conference Board’s confidence index rose to 63.3, exceeding all estimates of economists surveyed by Bloomberg News and the highest level in two years, according to a report from the New York-based private research group. Other figures showed home prices rose less than projected in the year through March.
“I’m relatively optimistic that we’ll get through the European debt crisis without dire economic consequences, but the jury is still out on that one,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. Home prices “are going to drag along the bottom for a while until we get a better handle on the overhang” of inventories.
The Conference Board’s measure of present conditions increased to 30.2 this month, the highest level since December 2008. The gauge of expectations for the next six months surged to 85.3, the highest point since August 2007, four months before the recession began.
The percent of respondents expecting more jobs will become available increased to the highest point since December 2003.
Confidence, “although still weak by historical levels, appears to be gaining traction,” Lynn Franco, director of the Conference Board Consumer Research Center, said in a statement. Expectations have been “fueled primarily by growing optimism about business and labor market conditions,” she said.
Expectations Not the Same as Jobs
Present conditions are telling one story while expectations are another. However, expectations are not the same as jobs. People are starting to believe nonsense about the strengthening economy even as the treasury market and credit markets are singing a different tune.
I happen to believe the credit markets.
5-year treasury yields and rising junk bond yields paint a far different picture than consumer expectations. (Please see Corporate Bonds Smacked, Junk Yields Rise, Deals Pulled; Treasuries Rally; Yield Curve Flattens; Global Slowdown Coming for details).
No matter what one thinks of the US economy in isolation, it should be crystal clear that Europe is slowing and China is gasping for air with an export model not prepared for a slowdown anywhere, let alone a global slowdown.
Moreover, various stimulus packages in the US have run their…
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Stop the madness now!
by ilene - November 21st, 2009 12:25 pm
Excellent post on the economy and saving it (or not) by Edward Harrison at Credit Writedowns. (My yellow highlighting) – Ilene
Stop the madness now!
This is a post I just wrote over at Yves Smith’s site Naked Capitalism in response to a reader request. Marshall Auerback has already written a reply as well and I will post this later today.
A reader at Naked Capitalism asked us to respond to a recent article from the Christian Science Monitor asking Does US need a second stimulus to create jobs?
Marshall Auerback has already done some heavy lifting. He says emphatically yes. Now I want to take a crack at this. My short answer is no. But before I go into this, as an aside, I wanted to mention Marshall’s new smiling, happy picture up at the great blog New Deal 2.0 where he now writes. Earlier, when Credit Writedowns was hosted at Blogger, he used a picture best described as a mug shot in his profile, but he has changed that one too (although he smiles there a little less). He thinks we haven’t noticed this sleight of hand. Well I have! Once upon a time, Marshall wrote with a man I called all bearish, all the time this summer. Take a look at that post; you don’t see him smiling now do you? We have Lynn Parramore, New Deal 2.0’s editor to thank for making Marshall Auerback into an optimist.
Different policy choices
But all teasing aside, I do want to take the opposite side of this trade. You see I too was a deficit hawk. And while I may have been backing fiscal stimulus, I have felt conflicted for doing so. Here’s how I see it.
You have four options:
- No stimulus. Let the chips fall where they may. Yves Smith calls this the ‘Mellonite liquidationist mode.’ The thinking here is that trying to avoid the inevitable bust only makes it that much larger. And the economic policies during recessions in 1991 and 2001 seem to bear that out. The Harding Recession of 1921 is commonly seen as gold standard response.
- Monetary stimulus only. Quantitative easing mania. My understanding is this is what Ambrose Evans-Pritchard has been advocating. The thinking here is that the flood of money and the
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
