STOCK MARKET WATCH -- Thursday, 30 May 2013

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15. Don't be fooled by the false economic recovery

http://www.guardian.co.uk/commentisfree/2013/may/29/economic-recovery-not-real



After five years of unemployment, government deficits and financial struggle, every American wants to call it a recovery and call it a day. That's why some optimistic economic data this week seem to have messianic importance, in the ever-optimistic belief that higher consumer confidence and rising home prices will deliver us from economic evil.

But if evil has one power, it is the power of illusion, to mask reality. And, in this case, that is also the power of the positive economic data.

Take the consumer confidence numbers, which are measured every month by the Conference Board and act as one of the more foolish hinges on which to hang our hopes. Consumer confidence in May jumped to 76.2, on a scale of 100. In the popular interpretation, that indicates that consumers believe the economy is improving.

It's also an object lesson in the silliness of believing in the validity of consumer confidence. As history shows, countries and people have long been confident when they had no reason to be.