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The mood of the consumer darkens
Tuesday, February 23, 2010
The Christian Science Monitor had, by far, the best headline on the plunge in consumer confidence reported by the Conference Board a short time ago:
Contrary to what Treasury Secretary Tim Geithner and Goldman Sachs chief Lloyd Blankfein might want to believe, the two are not unrelated.
Details are provided in this EconoDay report where an important bit of information is left out, barely discernible in the chart, that this is the lowest reading since last April:
The Conference Board's consumer confidence index fell back in a surprising and sizable way, down nearly 10 points to 46.0 in February (January revised to 56.5). Expectations, the index's leading component, fell more than 13 points to 63.8 reflecting a sweeping sentiment downturn in income, employment, and business conditions.Maybe that's because, with the exception of Wall Street, the U.S. economy never really got going last year, and people are just now beginning to figure that out.The expectations index never really got going last year, barely approaching the watershed 80 level, a level consistent in the past with economic expansion.
5 comments:
The permabulls at Econoday also didn't mention that the current conditions index reached the lowest level on record, going back to 1983.
The old economy was based upon borrowing goods from overseas, and using the borrowed goods to pay de jure monopolies for expensive services. The new economy is based upon confiscating goods from domestic consumers, and lending the confiscated goods to home buyers to trade for McMansions.
The malls are empty because purchasing power has been confiscated from domestic consumers via the printing press. While Anthem is increasing health insurance premiums by 40%, the bank is claiming that CPI prices are too low. Its madness.
You are too optimistic Tim. We knew it never got going but Washington and Wall Street haven't figured it out and they won't figure it out.
Netherlands government collapsed today because they ran on getting our of war and after they were elected they changed their minds. The people didn't and they will be having new elections.
Big money talks here, not accountability.
The way to change the mood of devastated consumers is to become producers.
Oh yes I said that some 15 years ago but I was told that I was the most crackpottery insane and stupid person they have seen.
Not that I welcome the insult, but, when I saw 100 million iPod was sold within 2 years almost all by young people who get their money from parents who borrowed the money themselves, I said: Let them enjoy their throwaway gadgets (all of which will be in the junkyard within 2 years). Let borrowed consumerism flame itself out.
I'm not going to disagree with your premise, but how much of the gloom of the "present situation" was due to the snow?
Also, the spread between present and future sentiment seemed very wide. . .
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