Outside the Beltway

Consumer Confidence Hits New Low

Steve Verdon
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The Conference Board’s consumer confidence index reached 25 (1985=100) for January. That is a new all-time low for the index.

The Conference Board Consumer Confidence Indexâ„¢, which had decreased moderately in January, declined in February, reaching yet another all-time low. The Index now stands at 25.0 (1985=100), down from 37.4 in January. The Present Situation Index declined to 21.2 from 29.7 last month. The Expectations Index decreased to 27.5 from 42.5 in January.

In other words, consumers don’t see the economy getting better for at least another six months. This fits with what Fed Chairmen Ben Bernanke told the Senate Banking Committee.

In his semiannual report to the Senate Banking Committee, Bernanke predicts the economy is likely to keep contracting in the first six months of 2009. But he also says “there is a reasonable prospect” the recession will end this year. He warns that a recovery will require getting credit and financial markets to operate normally.

Lets hope this is the case.

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33 responses to “Consumer Confidence Hits New Low”

  1. Bithead Avatar
    Bithead

    Wish in one hand, you know what in the other, Steve. You tell ME… what investor would want to put his money up against this market, with these indicators?

  2. Bithead Avatar
    Bithead

    I should have added; do any of you really see any of those turning around in six months?

    Two years, perhaps, after the next election. Between now and then? Hang it up, son… it ain’t gonna happen.

  3. Pete Burgess Avatar
    Pete Burgess

    Is consumer confidence influenced more by perception than reality? Could it be that Obama’s negativity is being reflected in the number? Let’s watch the number after Obama hopefully begins to preach more optimism, if he does.

    Also, do we have a credit card implosion event ahead of us?

  4. Bithead Avatar
    Bithead

    Hi, Pete;

    As to that, I think we might take AMEX as indicative… I’m hearing they offered a lot of people $300 cash to pay up accounts and close them recently. Didn’t get the whole story on that. But it strikes me they’re uncomfortable. If THEY are who else?

  5. Steve Plunk Avatar
    Steve Plunk

    We need to look at business confidence numbers as well. So far this administration and congress inspire no confidence for anyone other than the parasites that suckle on the government teat.

  6. Michael Avatar
    Michael

    We need to look at business confidence numbers as well. So far this administration and congress inspire no confidence for anyone other than the parasites that suckle on the government teat.

    So wait, you’re saying that if our politicians just inspired more confidence, our financial problems would be solved?

    Maybe if they would claim that corn ethanol will replace oil, that would suddenly become possible too?

  7. Michael Avatar
    Michael

    On that note, maybe if they had just done a better job of convincing us about that whole flowers and candies business, the Iraqis wouldn’t actually hate us.

    Obviously I’m being sarcastic, but then again Bithead believes that the war in Iraq was lost because Americans didn’t “believe” in it hard enough. Sorry Tinkerbell.

  8. Dave Schuler Avatar
    Dave Schuler

    The question in my mind is whether propping up zombie banks will facilitate or inhibit recovery. Japan’s experience suggests that it will inhibit recovery and that it can inhibit it for a darned long time.

  9. charles austin Avatar
    charles austin

    It is interesting. President Obama, Senate Majority Leader Reid, Speaker Pelosi, et al, spent two year denigrating the American economy, the American consumer, bankers, speculators, corporations, rich people, etc, and now seem dismayed that they can’t just flip a switch and have it all go the other way because the election is over. Having their self-fulfilling prophecies come true would seem to be their just desserts, if only it didn’t drag so many others down with them.

  10. tom p Avatar
    tom p

    It is interesting. President Obama, Senate Majority Leader Reid, Speaker Pelosi, et al, spent two year denigrating the American economy,

    Ahhh HA! Now we know who to blame! It had nothing to do with the housing bubble… or the over “leveragizing” (is that eve a word? i don’t think so) of deals… or the over rating by Moody’s etc of CDSs….

    Economic realities have NOTHING to do with our present down turn, it is all the doing of the evil trinity Obama/Reid/Pelosi, hereby renamed the “ORP Factor”.

  11. charles austin Avatar
    charles austin

    Your’e right tom p. It isn’t all President Obama, Senator Reid or Congresswoman Pelosi. After all, I wouldn’t want Congressman Frank or Senator Dodd to feel as though their contributions to the Fannie Mae and Freddie Mac fiascos were left out. Thanks for reminding me.

  12. odograph Avatar
    odograph

    OK guys, I’m going to try to pause, take a deep breath, and see this “talking down the economy” as you see it.

    The problem of course, as I attempt it, is that we can’t really tell who was dialed in, who said this was “baked in” … no wait a minute!

    I said this was baked in. Here, in these pages.

    So what are you going to say, that I was wrong, and it was talked down instead? I call that weak post-hock excuse-making.

    You were in denial, and now are face-saving.

  13. odograph Avatar
    odograph

    Here is another angle, if you can lift yourselves out of your partisan trenches for a minute:

    If we are a social and economic people (and we are), then we will reinforce ourselves on both sides of the business cycle. We will “talk up” an economy when it is healthy, but also sometimes too far (into a bubble). On the down side we may “talk down” with reasonable caution, but it may go too far (to a panic).

    I think it is particularly hard to avoid that panic when it follows an authentic bubble. What goes up really must come down.

    So, if you decry “talking down” now, remember to lambaste”talking up” when Larry Kudlow and crew get working on the next bubble. You’ll save yourself some of the hangover.

    Remember that your permanent cheerleaders are not blameless.

  14. charles austin Avatar
    charles austin

    Consumer confidence is nothing but a perception of how things are, not how they really are, which is a whole ‘nother matter.

    Are you really going to argue that Democrats didn’t talk down the economy the last two years? And for partisan reasons?

  15. odograph Avatar
    odograph

    That is reductio ad absurdum, Charles.

    You are asking me to believe that if “Democrats” spoke ill of the economy, they made it happen (as opposed to say me, a Republican)

    Actually, it is a reduction that cuts back to Kudlow and the CNBC brand of Republican bubble boosterism, isn’t it?

    If you aren’t talking up a bubble you are part of the problem? Is that it?

  16. Steve Plunk Avatar
    Steve Plunk

    Michael, I’m not saying all we have to do is inspire more confidence. I will say if we don’t inspire business confidence business will continue to delay projects, put off capital expenditures, and avoid new hiring. Without confidence in the future why would they risk any of those things?

    The talking down is merely a reaction to the real expectations from this administration and congress in regards to business climate. That’s not a partisan statement. Higher taxes, more regulation, and stifled energy exploration and development are a given by both sides. Those things also scare the business community into a hunker down mentality to weather the storm.

  17. Pete Burgess Avatar
    Pete Burgess

    Why don’t y’all debate the Fair Tax?

  18. sam Avatar
    sam

    Are you really going to argue that Democrats didn’t talk down the economy the last two years? And for partisan reasons?

    Well, yes they did. But this is par for the political rhetoric course, no?

    ECONOMIC PREVIEW
    Democrats talking down economy
    By Rex Nutting, CBS.MarketWatch.com
    Last update: 6:56 p.m. EST Feb. 20, 2004

    WASHINGTON (CBS.MW) — It’s the job of the loyal opposition to persuade the people that the politicians currently in charge have screwed up.
    George Bush and Dick Cheney did it in late 2000 when they started talking about how weak the economy was. The Democrats in the lame-duck Clinton administration squawked that the incoming leaders were talking down the economy, making things worse just by talking.

    Now it’s the Democrats’ turn to trash-talk the economy.

    On the other hand,

    White House blasts Cheney for recession remark

    From CNN White House Correspondent Major Garrett

    December 4, 2000
    Web posted at: 5:07 p.m. EST (2207 GMT)

    WASHINGTON (CNN) — The White House lashed out Monday at GOP vice presidential nominee Dick Cheney’s suggestion that the nation was moving toward an economic recession.
    …
    On Sunday, Cheney said there was “growing evidence” that the economy was slowing.

    “We’re seeing it in automobile sales and a lot of other areas, earnings falling off for corporations. And we may well be on the front edge of a recession here,” he said on NBC’s “Meet The Press.”

    Plus ça change, etc., etc., etc.

  19. tom p Avatar
    tom p

    Your’e right tom p. It isn’t all President Obama, Senator Reid or Congresswoman Pelosi. After all, I wouldn’t want Congressman Frank or Senator Dodd to feel as though their contributions to the Fannie Mae and Freddie Mac fiascos were left out.

    Touche! Charles… well done! Tho that was not my point. There is plenty of blame to go around on both sides of the aisle (actually my comment was directed more at bit than you… I just could not find his comment on a different thread) But I notice you do not direct any of your ire at Gramm, DeLay or McConnell? (not to mention Boehner, Blunt, or…. oh hell, pick your Republican) All I know is that every time I hear a Rep. speak of “We have to pay for this stuff….” I cannot help but remember Cheney saying, “Deficits don’t matter…” and the wall of silence that echoed back from the right.

  20. Pete Burgess Avatar
    Pete Burgess

    Maybe The Fair Tax is not debated because none of you understand it?

  21. markm Avatar
    markm

    In other words, consumers don’t see the economy getting better for at least another six months. This fits with what Fed Chairmen Ben Bernanke told the Senate Banking Committee.

    Which mimics what the CBO said a few weeks ago even if there was no “stimulus”.

  22. tom p Avatar
    tom p

    I will say if we don’t inspire business confidence business will continue to delay projects, put off capital expenditures, and avoid new hiring. Without confidence in the future why would they risk any of those things?

    And Steve, maybe business has no confidence in the economy, because IT JUST PLAIN SUCKS AND THEY KNOW IT BECAUSE THEY LOOK AT THE NUMBERS JUST LIKE THE REST OF US????

    Not picking on you Steve, but I have heard this particular meme time and again, and I have to say, business only cares about gov’t on the margins. In other words, what gov’t does definitely affects the bottom line because if they put their money here, or put it there, it might cost them a % pt or two… but when business just FREEZES up totally… it is because gov’t is no longer in charge, and they don’t know which way to place their bets.

    Believe me, these guys have been gaming the system for a long time… their fear now is that they can’t game the “system” any more.

  23. Michael Avatar
    Michael

    Michael, I’m not saying all we have to do is inspire more confidence. I will say if we don’t inspire business confidence business will continue to delay projects, put off capital expenditures, and avoid new hiring. Without confidence in the future why would they risk any of those things?

    Steve I agree that without confidence, business won’t spend. What I don’t agree with is that the lack of confidence is the fault of negative dialog on behalf of politicians, and not from the “reality on the ground” as it were. After all, the Democrats have been talking down the economy for the past 8 years, at least.

    Obama has his magic economic ponies, and you and Bithead have your magic economic fairies. Neither one is going to actually help us.

  24. sam Avatar
    sam

    BTW, if there was a mainspring for the shitstorm, it was the credit default swap. Todd Zywicki, over at Volokh, found this article on Wired that explains how the math behind the CDS worked–or, in the end, didn’t. Good reading:

    Recipe for Disaster: The Formula That Killed Wall Street

  25. Pete Burgess Avatar
    Pete Burgess

    I believe this theory was developed earlier by a couple of eggheads at Salomon Bros, then LTCM. Read “When Genius Failed.”

    Anybody want to discuss the Fair Tax?

  26. charles austin Avatar
    charles austin

    As I noted above tom p, I am more than happy to let many Republicans take their share of the blame. I don’t buy into the grief some people want to give Senator Gramm over the repeal of Glass-Steagall but I have little love for Congressman Delay or Senator McConnell. As I have asked elsewhere, whatever happened to limited government and enumerated powers?

    odograph, perception becoming reality is not reductio ad absuurdum. Talking the economy down alone won’t bring down the economy, but it will exacerbate an already bad situation and cause people to think things are worse than they are which leads to deeper, ever downward spiralling cycles. I see this constantly right now trying to keep a business going. This is conference and exhibit season for me and the crowds are down from last year, way down. Hell, I’ve got to conserve cash and limit purchases now because my customers are doing so. Be thankful if you don’t have to deal with this every day. Meanwhile, you can poo poo it all you want but they wanted people to think the eceonomy was going to hell in a handbasket and they got their wish.

  27. odograph Avatar
    odograph

    Charles, it is reductio ad absuurdum to look at a bad economy, and only see the people who saw it was bad before you did. You are saying that no one can ever tell you bad news.

    FWIW, Mr. Bernanke just said: “I believe that, overall, the downside risks probably outweigh those on the upside.”

    Was that bad news, or talking down the economy? Do you have to check Mr. Bernanke’s party affiliation too know for sure?

  28. odograph Avatar
    odograph

    Shorter: If you had a strong economy you wouldn’t be wasting time on who first noticed that your strong economy was missing:

    “this economy has deep structural problems”

    “shoot the messenger!”

  29. tom p Avatar
    tom p

    As I noted above tom p, I am more than happy to let many Republicans take their share of the blame.

    Sorry Charles, I just reread your above posts and I find no such reference of blame for those of the GOP who share the blame for this present mess. You have in the past on other threads, but not here.

    I just take exception to what is all too often a knee jerk response to blame the “other side” for current difficulties by those from either political philosophy

    I don’t buy into the grief some people want to give Senator Gramm over the repeal of Glass-Steagall

    The blaming of Gramm for the repeal of G-S defies logic. Consider this:

    “The final bipartisan bill resolving the differences was passed in the Senate 90-8 (1 not voting) and in the House: 362-57 (15 not voting).”

    And then Clinton signed it.

  30. charles austin Avatar
    charles austin

    odograph, I’m not saying what you think I’m saying. Stop projecting, clear your mind, and try again.

    tom p, I don’t think it is wise to start every comment with a listing of common agreements. I think the Democrats have a larger share of the blame, but I don’t know the exact percentages. To the extent that Republicans are responsible it seems as though it is because they want to be like Democrats or at least be liked like Democrats rather than sticking to their principles and telling the hard, honest truths. But YMMV.

    Fundamentally, the good ship Freedom is listing badly to port right now and we better right the vessel quickly.

  31. odograph Avatar
    odograph

    Charles, if you are only saying that crowds reinforce themselves, I would have thought you’d signal that to me by agreeing with my bubble references.

  32. tom p Avatar
    tom p

    Charles, with all due respect, when you say this:

    To the extent that Republicans are responsible it seems as though it is because they want to be like Democrats or at least be liked like Democrats rather than sticking to their principles and telling the hard, honest truths.

    and this:

    Are you really going to argue that Democrats didn’t talk down the economy the last two years? And for partisan reasons?

    in the same thread….

    This really does smack of “partisan hackery”, I mean this employs the same logic as, “One man’s terrorist is another man’s freedom fighter.”

    Charles, you are better than this. I do not expect to agree with you on much, but I do expect to follow your logic.

  33. charles austin Avatar
    charles austin

    tom p, I’m not sure I’m following your point here, but I do wish to be consistent. My apologies if I haven’t done so.

    FWIW, I do appreciate the civil tenor of your comments. I’ll try to maintain it.

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