Consumer Confidence?

From Bloomberg:

The consumer's mood is definitely downbeat, a strong indication that the jobs market isn't improving. The Conference Board's consumer confidence index fell back in a surprising and sizable way, down nearly 10 points to 46.0 in February (January revised to 56.5). Expectations, the index's leading component, fell more than 13 points to 63.8 reflecting a sweeping sentiment downturn in income, employment, and business conditions. The expectations index never really got going last year, barely approaching the watershed 80 level, a level consistent in the past with economic expansion.

The trouble in expectations signaled trouble for the present-situation component which dipped into the teens and toward the record lows of the early 80s. The index fell nearly 6 points to 19.4, reflecting pessimism over current business conditions where only 6.2 percent of the 3,000-home initial sample describe them as good. Only a miniscule 3.6 percent describe jobs as currently plentiful with 47.7 percent, up 1.2 percentage points from January, describing them as hard to get. This latter reading, which gets a lot of attention, will raise talk of trouble for February's jobs report.

There's trouble immediately following the report with equities and commodities both moving lower. Note that consumer confidence may have weakened but momentum and recent indications on the retail sector suggest that consumers haven't pulled back their spending, at least yet. The Reuters/University of Michigan consumer sentiment index for February, which edged lower in an initial reading at mid-month, will be posted on Friday.



Is it any wonder that consumers are not confident?  What is amazing is that the green shoot economists expected that confidence would be 55 rather than the actual reading of 46.

We are a long way from the 80 market that shows confidence in economic expansion.

Who can be confident when jobs are scare and living expenses are high?

What will happen to this reading when interest rates start to rise within the next 12 months or so making credit conditions more restrictive?

 These results reflect our hypothesis that this recession is different than any that we have experienced in many years.  There are multiple false starts to the recovery each followed by another downturn.  This is what we referred to as a WWW Recession.

The good news in this environment is we can expect that the buying power of our currency will improve as long as deflationary conditions persist.  This will encourage spenders to become savers who can then invest in businesses and technologies that will deliver the coming true recovery.  We can also expect the monetary metal gold to do well during these conditions and gold stocks to deliver a decent return on investment.