Consumer Confidence Sinks to 44.5 versus Consensus of 52.0

At 10:00 a.m., the Conference Board released its index of consumer attitudes — also known as the Consumer Confidence survey.  In short, the numbers were terrible.  First, last month’s confidence number was revised downward to 59.2 from the originally reported 59.5.  And that was the good news.

This month’s confidence number plummeted to 44.5 against expectations of 52.0.  The magnitude of the number rattled the stock market for a few minutes; with the DJIA falling 80 points immediately following the release.

Confidence has not hit this level since the depths of the recession in 2009.

Looking deeper into the report, we find the following:

  • Consumer expectations for the future (6 months out) dropped dramatically since last month — falling from 74.9 to this month’s print of 51.9.
  • Consumer assessment of the current situation also fell, from 35.7 to 33.3
  • Consumer assessment of the labor market weakened, with 49.1% or respondents replying that “jobs are hard to get.”  This compares to last month’s 44.8%.
  • Those responding that “jobs are plentiful declined to 4.7% from last month’s 5.1%
  • Expectations for inflation over the coming year remained unchanged.

These confidence numbers contrast dramatically with the recent, surprisingly strong, retail sales report.  Earlier in the week, retail sales were reported up while savings rates were down.  That isn’t the type of behavior one would expect from a consumer lacking confidence.

Considering that contrast, it is difficult to draw any real conclusion as it relates to stock and bond prices.  Perhaps the volatility experienced in the markets, coupled with governmental tinkering, Fed jawboning, and the debt downgrade has caused consumer sentiment to flip-flop rapidly.

Or perhaps the insatiable need for IPads supersedes the feelings of worry.

It would make for an interesting psychological study.