Stat of the Day: Consumer Confidence Plunges to April '09 Lows

Really? Consumers feel the economy is so bad now that it feels like April 2009 all over again? Back then, the US economy was at the end of a horrible recession labeled as the Great Recession. Our banking system just about collapsed and the housing sector was collapsing. Now the economy is growing at a slow pace, jobs are being added at over 100K per month, and home prices have mostly stabilized. Oh, and don't forget that the stock market has soared in those 2 years.

For August, Consumer confidence plunged to 44.5 from 59.2 in July and expectations around 50.

Why are consumers so gloomy? Sure the debt ceiling debate and the downgrade of US debt was depressing to watch but it didn't impact any jobs. Nor did it impact the future of the US with interest rates dropping after the downgrade.

Maybe all this explains why retail sales continue to rise while sentiment plunges. Consumers might feel gloomy due to the news, but it appears to be sending them to the shopping mall to cure their depressions. Also, the lack of over spending on housing probably leaves more money in consumer wallets for other items such as shoes.

• "Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook," saidLynn Franco, director of The Conference Board Consumer Research Center in a statement.
• The Conference Board said Tuesday that its Consumer Confidence Index fell to 44.5, down from a revised 59.2 in July. The number was the lowest level since April 2009 when the reading was 40.8. It also is far below the 53.3 that analysts had expected. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.
• As a result, one gauge of the index that measures how shoppers feel about the economy dropped to 33.3 from 35.7. Another measure that assesses shoppers' outlook over the next six months fell to 51.9, down from 74.9 last month.