It’s actually not particularly difficult to shock and awe corporate media talking heads. They’re easily offended by anything not couched in politically correct language, and anti-government sentiment is strictly verboten as far as they’re concerned.
And so, when the Conference Board (could they find a vaguer committee than that?) announced that confidence among U.S consumers slid in March towards a 16-month low point, monocles popped and mouths were agape as mainstream media pundits came to grips with the possibility that maybe… just maybe… the economy isn’t running at full clip.
Hopefully you’ll be better emotionally equipped to handle the numbers: apparently, the consumer confidence index fell to 124.1 in March, below the expectation of 132 and also below the reading of 131.4 in February.
Lynn Franco, director of economic indicators at The Conference Board, had plenty of excuses to assuage the touchy pundits, asserting that “confidence has been somewhat volatile over the past few months, as consumers have had to weather volatility in the financial markets, a partial government shutdown and a very weak February jobs report.”
Courtesy: Conference Board, marketwatch.com
Franco could only provide so many excuses, and eventually she had to make the concession that “the overall trend in confidence has been softening since last summer, pointing to a moderation in economic growth.” Crush the Street readers already knew about this, but for consumers of traditional media, evidently it was necessary to soften the blow with words like “softening” and moderate the shock with words like “moderation.”
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Other disheartening recent data includes the government’s employment report indicating the creation of only 20,000 jobs in February, a sharp decline in housing starts and building permits in February, and the Conference Board’s survey finding that the proportion of people expecting more jobs in the months ahead decreased from 19% to 16.4%, while those anticipating fewer jobs increased from 12.3% to 13.4%.
And, oh yeah, there’s that whole “slowdown in global economic growth” thing, but they probably don’t want us to talk about that. The FOMC did allude to this in their most recent meeting, buy hey – they’ve got it all under control, remember? Just keep buying stocks and everything will be just fine…
If we do that, though, we’d have to ignore the fact that a consumer confidence drop of this magnitude is a reliable recession indicator. As Jerome Levy Forecasting Center Director of Research Sri Thiruvadanthai explains, “The pullback in current conditions of the Conference Board Consumer Confidence Survey is significant. The current conditions are an excellent coincident/leading indicator and the peak has presaged recessions by 2-14 months.”
Beyond the hard numbers, we should consider what a steep drop in consumer confidence really means: people aren’t in a buying mood, and they don’t feel like they’re making enough money to buy stuff. That’s bad for buyers, bad for sellers, and bad for the economy.
The government will continue to print low unemployment numbers, but the populace’s consumer confidence tells a deeper, truer tale. The nation and the world run on commerce; employment is merely a by-product of that. When consumption and commerce slow down, everybody gets hurt.
Well, maybe not everybody – if you’re truly living off the grid and self-sufficient, then you’ll probably be fine, or at least better off than the rest of us. And if that describes you, then my hat’s off to you, monocle or no monocle.
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