Consumer Confidence, as measured by the Conference Board, came in “better than expected” according to the latest report rising to 59.5 in July from a revised lower reading of 57.6 in June. However, even with this bump up in May, which will most likely be revised lower next month, is still lower than any other reading from the beginning of the year.
Despite the one month bump this is still a very recessionary reading. The average reading during the “actual” recession was 72.9 and during the previous expansion it rang in at 102. Therefore, when put into context of normal periods – this months reading of 59.5 is not only near the lows of this recovery it is also well below any levels that could be considered as showing consumers as “confident”.
The index is made up of several components from current expectations to future expectations as well as inflation, employment and buying intentions. The “present situations” index continues to fall and is now down three months in a row. The “expectations” component did rise in July but is still at levels that is below any other read from January to May of this year.
Employment is still a major concern for the average “American” as the “Jobs Hard To Get” index rose to a four month high, so much for those jobs that were getting created. This implies that we will likely see the unemployment rate rise again during the next release of jobs data in August.
The bottom line here is that consumers, which make up roughly 70% of the economy, are not feeling like, or acting like we are in a recovery. They aren’t interested in autos, auto sales have come from stuffing dealer channels (just like they did going into the peak of the market in 2007-08), buying homes or appliances.
However, even with the reality that the economy really is in a recession – stock prices are still expected to rise. Somewhere along the way people have forgotten that earnings come from revenue and revenue comes from sales and sales, well, they come from the consumer. You might just want to pay attention to the road ahead.