Consumer confidence in the last month fell to 39.8 according to Bloomberg. It was the lowest point in two years. The President responded to the defeat of his own jobs program by the Democrat-led Senate by returning to the campaign trail to blame Republicans for being obstructionists. This is either the audacity of hope in the Harry Truman 1948 strategy of running against a do-nothing Congress to an upset victory—or an admission that even the President knows he is headed for defeat.
Meanwhile, back at the bottom line the story looks somewhat different. The stock market rallied after the EU tried yet another scheme to stabilize the Greek tragedy in their midst. It may be smoke and mirrors again, but the markets clearly applauded the continued efforts and the willingness of the Germans to step up yet again. Corporate earnings are coming in as expected with a few misses explainable by plausible or one time events. The best news was the Baltic Dry Index which measures shipping of raw materials and commodities was up for August signalling positive future economic growth.
Why the conflicting signals?
While the markets are preparing for better times ahead based upon improving fundamentals, consumers still feel abandoned and uncertain. The thing holding us back now is that lack of confidence. The cause of that lack of confidence is the widely held perception that the country is not going in the right direction. The President’s policies not only have not made things better, but arguably are making them worse longer. His strident campaigning and vilification of his opponents far from helping him just reinforce our view that the President is in over his head and that we made a big mistake in believing in his audacity of hope!
As the President gets more shrill the Republicans are interviewing replacements and so far we have everyone’s second choice, Mitt Romney, as the guy still standing after the mud slinging of many banal debates. We know who we don’t want but we don’t yet know who we might get.
But recovery is not about politics it is about confidence. Confidence enough to unleash hoarded cash in business bank accounts by hiring people instead of buying equipment, materials and other companies. Confidence enough to make bets even while uncertain about the future. Confidence that rational regulation and reasonable taxes will eventually be ahead for us.
For business the reality is while there still is uncertainty affecting confidence there is also worry about being left behind so business spending is forward looking, positional, strategic in focus. For individuals, consumer confidence is a reaction to the present, worry about the future, uncertainty about jobs, kids college education and retirement as individuals we focus on the price of gasoline and the unemployment rate while not realizing it is a lagging not a leading indicator.
So we have not yet talked ourselves into a recession but it was close. What stopped the economy from going over the cliff a second time? It was the fundamentals combined with something missing for a while—just enough optimism—to make a difference.
This is the worst message for President Obama. The people are more optimistic as the election gets closer not because your policies are working but because they can count down the days remaining on your clock, Mr. President. The cruelest irony is while you travel the country accusing your opponents of everything nasty and mean, you look nastier and meaner than your opponents and thus we have lost confident in you and are riding out your term. Even if things get better—much better—we still won’t vote for you again, Mr President, because we realize you don’t believe in the same American dream we still crave and are confident we can have again—after the next election.
That is the true genius of America. We vote with our votes!
- Letters to the President #1009: ‘Consumer confidence keeps sinking’ (ac360.blogs.cnn.com)
- Manufacturing insurance holders ‘could enter recovery’ (premierlinedirect.co.uk)
- Consumer Confidence Drop Could Spell Trouble for Incumbents (usnews.com)
- Mixed Readings on Consumer Confidence in October (eyeonhousing.wordpress.com)
- Consumer confidence at lowest since recession (seattlepi.com)
- Pending Home Sales Continue to Drift Down in September (eyeonhousing.wordpress.com)
- The Confidence to See our Glass Half Full (civicchoices.wordpress.com)
- 60 Percent Of Americans Say Obama Does Not Inspire Confidence About A Recovery (businessinsider.com)