Sentiment Turns Ugly

There is no way to spin today’s consumer confidence report and make it glow. It is flat out rotten. Just a month after turning up nicely and leading us all to believe consumers had started to feel a little better, the bottom fell out.

The Conference Board survey usually bounces around with a score in the 90’s when the economy is going well. The latest reading puts it at 46.0, down from the January reading of 56.5. Bear in mind that the January figure had been a 16 month high and represented the third straight month of improvement, so it had appeared we were finally crawling out of the hole we dug ourselves.

Some of the sub-category numbers are mind numbingly bad: only 6.2% of consumers surveyed say that the current economy is ‘good’. Only 3.6% say jobs are ‘plentiful’. The sub-index that measures present day conditions is stuck at 19.4, its lowest reading for 27 years. Fear is rampant, and specifically fear over incomes continues to dominate the consumer mood.

This is ugly stuff by any measurement. The populace’s mood has turned sour in these early weeks of 2010 which is a very bad sign for the economy. Persistent concerns about jobs and wages are clearly not fading. On the contrary they appear to be re-surfacing. Employers have failed to step up hiring, and show no signs of changing from their fear driven hunkered down position. The longer we remain in this no-mans land of economic growth without job growth the more certain it is that we will watch growth fade away. The recovery is by no means an assured one, and with consumers continuing to see no reason for hope, the more sentiment flounders the more likely becomes another decline.

Under these circumstances it is extraordinary that we can only pass a watered down jobs bill through the senate. I am left to wonder what kind of disaster it will take to inject a sense of urgency in that hopelessly moribund institution.

All I can say is that I hope this month is an aberration. Let’s put it down to the end of winter blues and look forward to spring. Otherwise this year will disappoint more than even I had imagined.

On the brighter side: I trust that today’s report squelches any talk of a Fed tightening or a budget deficit reduction. Either would plunge us backwards, and with consumers already in this kind of an ugly mood, that is not a circumstance we want to contemplate.