Feeling more upbeat on the economy? Nobody believes you
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Wall Street desperately wants American consumers to be feeling better. And they are this month, according to the latest national consumer-confidence survey by Reuters and the University of Michigan.
But the survey’s overseers are advising the rest of us to pretty much ignore the upturn in confidence, saying it most likely is the proverbial ‘dead cat bounce.’
In other words, there’s no confidence in the confidence number.
The Reuters/UofM consumer sentiment index rose to 61.2 this month from the June reading of 56.4, which was a 28-year low. The survey’s index of consumer expectations also rose, to 53.5 from 49.2 in June.
‘Even after the small July gain, the overall level of consumer confidence is dismal and still points toward declines in the pace of spending in late 2008 and early 2009,’ said Richard Curtin, director of the survey.
Although it’s possible that the uptick indicates that consumers had ‘overestimated the extent of the economic damage,’ don’t bet on it, Curtin said.
‘It is more likely that the gains reflect a ‘dead-cat bounce,’ a phenomena that has been repeatedly observed over the past 50 years: Following a steep decline in confidence, a small gain is recorded before confidence resumes its downward slide,’ he said. (ASPCA warning: Do not try this on cats at home.)
One highlight from the July survey: Half of consumers expected their living standards to decline in the year ahead.
‘The appraisals of consumers of their own finances as well as conditions in the national economy remained very negative, near the worst levels recorded in the 50-year history of the surveys,’ Curtin said.
Reuters/UofM offered not a single word on that old ‘it’s-always-darkest-before-the-dawn’ concept. That apparently will have to wait for a much lower reading on the indexes.