Friday, April 11, 2008
Reuters reports that consumer sentiment has plunged to a new 26-year low. Let's see... That would be 1982... Wasn't that the beginning of the last bull market in stocks? It must be time to buy stocks again! Quick, someone call CNBC!
The Reuters/University of Michigan consumer sentiment survey fell from 69.5 in March to 63.2 in April, well below analysts' expectations near 70.
The April result is the lowest since March 1982's level of 62.0, when the "stagflationary" period of low growth and high inflation was still fresh in the memory of many Americans.Those late-2005 hurricane related plunges in confidence have really been smoked now. They had held up for quite some time - all the way up to February 2008.
"There have only been a dozen other surveys that have recorded a lower level of consumer sentiment in the more than 50-year history of the survey," The Reuters/University of Michigan Surveys of Consumers said in a statement.
"Persistently high food and fuel prices as well as rising unemployment have caused consumers to view their future financial prospect more negatively (than) any other time since 1980."
The report showed its reading on one-year inflation expectations jumped to 4.8 percent -- the highest since a similar reading in October 1990 -- from 4.3 percent in March.
Five-year inflation expectations rose to 3.1 percent -- the highest since December 2007 -- from 2.9 percent in March.
As for "inflation expectations", more than anything else, these numbers track the price of gasoline. What we need is a summer-2006 style energy sell-off to knock oil prices back toward $50 and gasoline back toward $2.
It's too bad that Goldman Sachs sold their commodity index to Standard & Poors a while back or they might be able to help by causing $6 billion worth of gasoline futures to be dumped onto the NYMEX (see Friends in High Places).
Oh well, they'll have to think of something else.