The effects of high unemployment, a troubled housing market, and households which remain leveraged at a relatively high level have pushed consumer confidence back to rates not seen since mid-2009.
According to the latest Gallup Consumer Confidence Index, there was a significant drop in confidence in the late May early June period compared with late April and early May. Both middle/lower class households and upper class ones believe that economic conditions are “getting worse” in the U.S. The number was 62% among the middle and lower classes and 58% among upper class respondents.
The Gallup economic confidence results are based on random half-samples of about 500 national adults, aged 18 and older, each day. Weekly results are based on telephone interviews with about 3,500 adults.
The figures should be expected based on data that has come out for the last two weeks based on economic activity late last month and in the first two weeks of June.
The FMOC notes show that most members of the Fed believe that the economy is slowing again, to some extent due to trouble in Europe. The central bank expects to keep interest rates near zero to support expansion. The number of housing starts and new home sales hit all-times record lows despite mortgage rates that have not been this low in a generation. Recent numbers from RealtyTrac show foreclosures above 300,000 a month and there are about 11 million underwater mortgages.
Weekly jobless figures have not made any significant improvement and Congress has failed to pass legislation that would extend jobless benefits for 1.3 million Americans. Many of those people will be left without money to meet their financial needs.
The economy in the Gulf region, almost certainly shattered by the BP oil leak, is likely to begun to have a drag on national GDP
There is very little to encourages Americans about the economy now, even if they have jobs. All they need to do is read a newspaper.
Douglas A. McIntyre