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Amid Job Worries, Confidence In Economy Wanes

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Americans’ confidence in the economy eroded further in July, as job-market worries have proved stubbornly stagnant. The report, which was released Tuesday, raised concerns about the overall economy and the back-to-school season.

A second report on Tuesday showed an increase in home prices in May, but noted that much of the jump was the result of the government’s home buying tax credits, which have run out.

In a report that reflects the skittishness of Americans, the Conference Board, a private research group, said that its Consumer Confidence Index slipped to 50.4 points in July, down from the revised 54.3 in June. Economists surveyed by Thomson Reuters expected 51.0. The decline follows last month’s nearly 10 point drop, from 62.7 in May, which marked the biggest since February, when the measure also fell 10 points.

The second month of declining confidence follows three months of increases.

With unemployment stuck near 10 percent and the stock market having wiped out gains made early this year, Americans are reluctant to spend. A continuing stream of sobering economic data — from disappointing job figures in May and June to weak housing numbers — is increasing worries that the economic recovery is stalling just as government stimulus programs are disappearing.

One component of the Consumer Confidence Index, which measures how people feel about the economy now, declined to 26.1, from 26.8. The other barometer, which measures respondents’ outlook over the next six months, declined to 66.6, from 72.7 last month.

The overall index — which measures how shoppers feel about business conditions, the job market and the next six months — had been recovering fitfully since hitting an all-time low of 25.3 in February 2009.

Economists watch the number closely because consumer spending accounts for about 70 percent of American economic activity and is critical to a strong recovery. A reading above 90 indicates the economy is on solid footing.

The Conference Board survey, based on a random survey mailed to 5,000 households from July 1 to July 21, showed that consumers’ assessment of the job market was more negative than the previous month. Those claiming that jobs are “hard to get” increased to 45.8 from 43.5 percent, while those saying jobs are “plentiful” remained unchanged at 4.3 percent.

Consumers were also more downbeat about future job prospects. Those expecting more jobs in the months ahead declined to 14.3 percent from 16.2 percent, while those anticipating fewer jobs rose to 21.1 percent from 20.1 percent. The proportion of consumers expecting an increase in their incomes declined to 10 percent from 10.6 percent.

It's the loss of confidence recovery.

The stats in the US are being spun to try and create confidence and it's just not working. One suspects people can see what's happening and simply don't believe things will be improving anytime soon.

Still it's not like they've been bringing demand forward for decades with debt is it? God just imagine the economic mess that would create....

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Shares on Wall Street struggled Tuesday on reports that consumers had become more pessimistic about the job market and the economic recovery in general.

Indexes that had started higher after an upbeat outlook from the chemical company DuPont and a mildly optimistic report on housing prices turned lower after the Conference Board said that its Consumer Confidence Index slipped to 50.4 in July, down from the revised 54.3 in June.

Conrad F. DeQuadros, economist with RDQ Economics, said investors were focused on the consumer confidence report.

“Despite better than expected earnings reports, especially last week, unfortunately the economic data continue to be weaker than expectations,” Mr. DeQuadros said. With consumer spending accounting for about 70 percent of the overall economy, analysts closely watch the moods swings of Americans as guideposts to the recovery.

Analysts said many Americans were worried about the weak labor market. In its survey of 5,000 households, the Conference Board found that the percentage of consumers who said jobs were difficult to obtain increased to 45.8 percent in July from 43.5 percent in June.

“This suggests hiring remains few and far between,” said Ryan W. Sweet, senior economist with Moody’s Analytics. And until companies begin hiring and unemployment falls, many analysts expect consumers to remain reluctant to open up their wallets.

“Overall this report is consistent with recent economic indicators which have been on the low side of expectations,” Mr. Sweet said of the Conference Board report. “We think the recovery is going to be very vulnerable this summer before growth accelerates during the fourth quarter of this year and into 2011.”

Q4 is that when the Fed starts printing? That's the only reason that inflation growth will happen, providing it gets into the economy, if the banks just hoard it again then there will be no growth acceleration.

To be honest I can't see why there is going to be any growth at all.

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