Confidence has a lot to do with the economy, as does trust. After all, you wouldn’t buy a home if you didn’t believe you’d have a decent income for the next 30 or so years. And there’s short-term effects, too: You are probably planning your summer vacation right now. How confident you are about your job status, or any potential raise or bonus, has a lot to do with deciding between that two-week European adventure and a staycation. Confidence (or a lack of it) also nudges you towards buying a new car or fixing up the old one, and buying a new TV or putting up with a smaller screen for another year or two.
So there’s reason to fret this week as the Conference Board released its monthly measure of American consumer confidence, and found it had slipped yet again. New jobs aren’t quite rolling in as quickly as we though, and that’s been blamed for the dip in sentiment.
American optimism had been rising since December, but this week’s report says all those gains are gone. “Swings and roundabouts,” as my Irish friends like to say. (What’s that mean?) It’s another indication that America is running in place a bit, and that place isn’t really so great.
It’s important to note that consumers feel a whole lot better than they did in April 2014. This latest dip could be a short-term problem. Spread out your view, and the general trend for American feelings is certainly on the rise since the Great Recession. Of course, it had nowhere to go but up.
It’s also important to note that a one-month snapshot of how people feel doesn’t tell you a whole lot. Sentiments can change quickly. The other oft-cited consumer mood index, the University of Michigan Consuner Sentiment Index, climbed a bit in early April after falling in March.
This news does make one thing clear, however: Happy days are not here again. The March jobs report, released in early April, revealed that job growth had slowed. As I’ve been writing often, wage growth has never really picked up. The picture is muddled, and I’m sure many of your lives are muddled. This, ironically, is great news for Wall Street, because it probably means the Federal Reserve has an excuse to postpone rate increases yet again, or at least it can justify raising rates very slowly. That’s good for stocks.
But somehow, that’s not putting the rest of us in a very good mood. Don’t fall for fake optimism, friends. It’s tough out there, and it’s going to be tough for a while, but it sounds like you know that. The Conference Board says Americans are pessimistic about wages and jobs, too.
“Those anticipating more jobs in the months ahead decreased from 15.3 percent to 13.8 percent, while those anticipating fewer jobs rose from 13.6 percent to 16.3 percent. The proportion of consumers expecting growth in their incomes decreased from 18.8 percent to 18.3 percent, while the proportion expecting a decline increased from 9.7 percent to 11.2 percent,” the Conference Board says in its release.
By way of explanation, The Consumer Confidence Index is released each month by The Conference Board. It’s based on a scientific-ish survey conducted by Nielsen. The Index now stands at 95.2, down from 101.4 in March.