Consumer confidence numbers slid more than expected in June as Americans remain worried about inflation, a stalled recovery and dim job prospects. The numbers reflect a vote of no confidence in the Obama administration’s efforts at job creation, after a host of reports show joblessness still persistent and an anemic economic recovery.
At least one economist thinks that sliding consumer confidence linked to joblessness could do in Obama in 2012.
The University of Michigan reported that their consumer confidence index moved downward in June to 71.8 from 74.3 in May and well below economists’ expectations of 74. It was hoped that the recent decline in gas prices would spur greater confidence by consumers.
A breach of 70 in the confidence index could be considered a sign that a recession that affects consumer spending is settling in.
"Normally, sentiment readings of 60 mean it's a recession and readings near 80 mean times are okay, or almost good,” Carey Leahy, economist and managing director at Decision Economics told Reuters. “Now the readings are at 70. That's quite representative of how people feel. Job growth is, at best, anemic and the unemployment rate is high. If you've been laid off, it's probably been for a long period of time. That can't help but affect these sentiment figures. And whenever you open the paper, there's more bad news. The one positive development is that gas prices have come down and businesses and consumers are not pulling in their heads."
Meanwhile Bloomberg’s survey of economic expectations showed Americans more pessimistic than they have been since March of 2009. Especially hard hit were older people and lower income groups.
“The Bloomberg gauge of economic expectations, released yesterday with the weekly comfort index, fell to minus 31 this month,” reports Bloomberg.com “the lowest level since March 2009, from minus 16 in May. The outlook deteriorated most among households making from $15,000 to $40,000 a year and among older Americans.”
While consumer confidence and expectation levels don’t necessarily tell economists how consumers will behave in the future, they do reveal an uncomfortable trend.