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Just a few more bits of data among many, but today’s consumer confidence numbers were dreadful.
The Conference Board’s consumer confidence index fell 4.8 points to 60.6 in August. Since peaking at 71.6 in February, the index has dropped 11.0 points to its weakest reading since November 2011. The weakness in the Conference Board index in August contrasted with the modest improvement already reported in the preliminary University of Michigan consumer sentiment index for the month, but the deterioration in consumer attitudes looks reasonable considering the recent increases in jobless claims and gasoline prices.
IHS Global Insight:
Consumer confidence is digging deeper into recession territory, making it perfectly clear that there is a high degree of pessimism on job prospects and the overall economic outlook. Adding fuel to the fire is raising pump prices.
All is not well on the consumer front and retailers are feeling the pain. Americans are spending less money and time shopping. Consumer spending trends have had noticeable fits and starts that are not indicative of a robust, healthy, and confident American consumer.
This is a bad report. Last month, consumer confidence increased for the first time in five months. Currently, consumer confidence is at a ten month low. Last summer, consumer confidence plunged by 27% due to the debt ceiling debacle. There had been considerable gains in confidence in the latter part of last year and the beginning of this year. However, consumer confidence fell by only 6% this summer – so, the good news in this report, is that the summer blues have not been as bruising.
Looking ahead, consumer confidence is likely to remain in recession territory, unless there is a dramatic shift in payrolls and wages.
Of course, why wouldn’t consumer confidence be in the dumps given high-but-stagnant unemployment and below-trend GDP growth? Some 70% of Americans think the country is headed in the wrong direction.
Given all that, many right-of-center folks wonder why President Obama isn’t headed for a defeat as bad as Jimmy Carter’s 10 percentage point beating by Ronald Reagan in 1980.
Yet the polls show Obama and Mitt Romney in a tight race. At a forum earlier today, pollsters Kellyanne Conway and Whit Ayers offered four reasons why 2012 isn’t looking like 1980:
1. Jimmy Carter won a close 50.1%-48% race to become president. Obama won by a near landslide, 52.9%-45.7%. Ayers says the bad economy has pretty much wiped out that 7-point lead, but given such a huge head start, Obama went into his reelection campaign with a much deeper reservoir of goodwill than Carter had.
2. Obama has a much more favorable demographic situation than Carter did. Ayers said that if Romney were running with an electorate that looked like Reagan’s in 1980, he would be winning by a landslide. In 1980, 88% of voters were white; today 74%.
3. Conway agreed that a variety of economic woes makes it look like “a perfect storm” in Romney’s favor. But the long duration of economic weakness and the uncertainty that has come along with it may have made voters shy about adding to the uncertainty by electing a new president. This is why it is critical for Romney to present a clear, confident, competent, and comforting vision of what a Romney presidency would be like.
4. Conway says the Long Recession might also have made voters so pessimistic that they no longer believe the economy can be righted in just four years. Thus, they believe, Obama deserves more time to right the ship.
I would also add that a) there was an outright recession in 1980 — not just a lousy recovery; b) the unemployment rate surged from 6.3% in January 1980 to 7.5% in October; and c) the Misery Index (unemployment + inflation) was just over 20 in 1980 vs. just under 10 today.
It is hard for Obama to argue the U.S. economy has turned a corner. For Carter, it was impossible.
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