STOCK MARKET WATCH -- Friday, 31 July 2015

[Demeter]

20. Americans’ Economic Confidence Gets Mauled by Wolf Richter

http://wolfstreet.com/2015/07/28/despite-rosy-scenario-americans-lose-economic-confidence/

This is one of those things that at first gets ascribed to sampling error or a statistical fluke or the weather or something, but then it wobbles lower month after month, in crass defiance of all rosy scenarios that had been so carefully laid out, and confirmations are hailing down from other directions, and suddenly it’s serious.

In early January, the economic confidence of Americans had reached the highest level in the Economic Confidence Index since Gallup started tracking the data in 2008. At +5 in January, the index wasn’t particularly high. But most Americans don’t live in the glorious Fed-goosed Wall-Street economy. They live in the real economy. And there, things have been tough.

Crummy as it was, January was practically glorious compared to the low of the Financial Crisis, when the Economic Confidence Index hit -65. That must have been at about the time when Treasury Secretary Hank Paulson told Congress that the world would end unless he got unlimited means and power to bail out certain big financial outfits, such as his former employer Goldman Sachs.

But in February, economic confidence began to zigzag lower. The index for the week ending July 26, released today, dropped another 2 points from last week, to -14, the worst level since September. This is what “gradually” (as Gallup called it) swooning economic confidence looks like:



The index is a composite of two sub-indices: one tracks how Americans perceive current economic conditions; the other tracks how Americans see future economic conditions.

Last week, I fretted over the deterioration of Americans’ economic outlook since January, which had plunged 25 points from +7 in January to -18 now, and I wondered what dark clouds Americans were seeing in the future that would impact their own lives, clouds that the ebullient stock market has remained blind to.

Today, the future conditions index remained at this dreary level, with 39% of Americans saying the economy is “getting better,” while 57% – that’s well over half – saying it is “getting worse.”

But in terms of current conditions, as of last week, Americans had not yet thrown in the towel: that index had been down “only” 8 points from +3 in January to -5 last week. But today, Americans’ view on current conditions caved, and the index plunged 4 points in one fell swoop to -9, with only 23% of Americans saying the economy is “excellent” or “good” and 32% saying it is “poor.”



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