Consumer sentiment takes a tumble in November
Filed under: Economy
Chalk up a mixed-bag week for the U.S. economy: Jobless claims continued to decline, the Dow made progress solidifying gains above 10,000 -- but consumer sentiment plunged. The Reuters/University of Michigan Surveys of Consumers says its consumer sentiment index for November (preliminary) decreased to 66 from 70.6 in October, Reuters reported Friday. Further, the index of consumer expectations declined to 63.7 from 68.6 in October, while the current conditions index fell to 69.6 from 73.7 in October.
A Bloomberg News survey had expected the November preliminary sentiment index to rise slightly to 71 for November. It stood at 74 in September and 67.5 in August. It hit a cycle low of 55.3 in November 2008. The record low of 51.7 was set in May 1980.
Separately, the Bloomberg Professional Global Confidence Index declined to 60.3 November from 61.7 in October, Bloomberg News reports. However, the index remained above 50 for the fourth consecutive month, meaning there were more optimists than pessimists in the survey, which questioned more than 1,500 Bloomberg users Nov. 2 to Nov. 6. The University of Michigan's Consumer Survey Center questions 500 households each month on their financial conditions and attitudes about the economy.
Investors should pay attention to consumer sentiment because it usually precedes consumer decisions to buy (rising sentiment) or hold off purchases (falling sentiment) -- and historically consumer spending has accounted for the bulk of U.S. GDP. And Bloomberg's PGCI provides insights into how institutional investors and investment professionals feel about the economy and investing conditions.
Further, November's unexpected drop in consumer sentiment will likely renew the debate on the sustainability of the U.S. economic recovery. Some economists argue that housing sector stabilization, manufacturing output increases, a rise in exports and government spending via the fiscal stimulus package will create enough momentum to pull the U.S. economy out of its worst recession in more than 25 years. These economists cite the 3.5% increase in third-quarter U.S. GDP as evidence of the recovery's start.
Conversely, another economists' camp argues that the 10.2% U.S. unemployment rate, high public/private debt levels and the lingering hangover from the housing bust (including foreclosures) will combine with high oil prices to, at minimum, limit GDP growth, and, at worst, tip the economy into a "double-dip recession."
Economic Analysis: To be sure, this is a disappointing preliminary reading for November consumer sentiment, with consumers still taking a reserved stance, given high unemployment and overall weak job market conditions. If consumer sentiment continues to decline, that would likely weigh on GDP, given the historically strong correlation between consumers' attitudes and spending.
That said, the economic recovery thesis remains intact among most economists, and here's one reason why: After a recovery has started, the U.S. economy has never fallen into a double-dip following a recession of 18 months or longer. Moreover, the draw-down in factory inventories and pent-up demand suggest the U.S. will remain on the recovery road. But consumers, understandably, aren't celebrating just yet.
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Reader Comments (Page 1 of 3)
11-13-2009 @ 12:17PM
DAVO said...
THE WHOLE HOUSE OF CARDS IS READY TO FALL AND PUT THE DOMINO THEORY INTO PLAY . WHILE THE GOVERNMENT EATS THE SEED CORN .
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11-13-2009 @ 12:26PM
studebakermon said...
how many people are running out of benifits that aren't counted anymore
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11-13-2009 @ 1:47PM
John said...
We are simply tired of being lied to by our corrupt government officials.
We no longer have any trust in anything they say.
11-13-2009 @ 12:39PM
Alex said...
Couldn't agree more with Davo.
No jobs = no buy = no sales = no revenues = no profit = more layoffs = less buying = nobody else left to cut = raise prices = inflation = less buying = less confidence. This is a serious downward spiral that our supposed elected "leaders" in Washington need to address immediately---instead of issues with Iraq and Afghanistan ( we need to get out of there now ).
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11-13-2009 @ 12:43PM
jessie said...
it must be that recovering economy thing
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11-13-2009 @ 1:14PM
John said...
NOT "Obama has no idea what he is doing" might be what most people are saying but believe me he knows exactly what he is doing, bankrupting America, Having Government take over industry, weakening the middle class, weakening future generations of Americans, cap and trade, Obama care, zahar's. Do you see a pattern or do you still want to burry your heads?
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11-13-2009 @ 2:19PM
tnash26170@aol.com said...
This is not just a reply to John, but to everyone who keeps complaining about how this country is headed into oblivion, that it is becoming socialist and whatever else seems to be the flavor of the month.
I have been in nearly 100 countries around the world, including many times into former Communist East European countries and Southeast Asia. One thing I have come to realize: Americans are the most unhappy people on this planet. Perhaps too much democracy is a bad thing.
Complain, complain, complain. I know noone in this country making $1 per day, or sitting along the roadway with a festering infection and asking for assistance, or being worried they will be arrested and jailed with no trail, and so on. But do the people who do live in such conditions complain incessantly? No, they feel what they have is their lot in life.
We want everything, in a nation with over 300 million people. We really care little about our fellow man.
I have been in Islamic countries where the people are so friendly it is amazing. Yes, there are bad Muslims, but most Muslims don't like them either. There are also bad Jews and Christians and Hindu and Buddhists. But all of the ordinary people people look at the essential humanity of the people they meet and if they are met with a smile they would give you the poorest shirt off their back.
Would you do the same? Or would you just shout about what you have and not want your neighbor to have the same. WE are the ones who have lost our humanity...and it is getting worse.
Get off your bitching. It is really getting annoying.
And if you want to take government back and have a change, how about proposing something for those who don't listen to Rush or watch Fox. There are many more of them out there than there are of you.
11-13-2009 @ 3:23PM
Lucrezia said...
John,
Why worry now about what Obama has done. Bush has done a great job at paving the way towards economical decline years before Obama became a house hold name!
11-13-2009 @ 1:21PM
KELLI2L said...
Yet our politicians go on enjoying THEIR lavish lifestyles - great insurance and raises - on our dime. . . .
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11-13-2009 @ 2:59PM
TONY said...
AND OBAMA TAKING VACATIONS ON A 747 PRIVATE PLANE WITH FULL BENEFITS AND OPEN SPENDING CREDIT CARDS. WHAT A JOKE THE GOVERMENT IT IS. WHILE THE TAXES UP, UP AWAY.
TONY
11-13-2009 @ 1:26PM
Mike said...
Consumers aren't spending; how can they when they have lost their job or watched their neighbor lose his and watched more industries sending the "good paying jobs" overseas? The problem is jobs plain and simple. Perhaps it's time the US require it's companies that use foreign manufacturing sources to comply with US standards for protecting the environment, its workers safety and other controls US manufacturing companies are required to comply with...if that was imposed, a lot of companies would return their manufacturing plants to US soil and give our works back their jobs. The other issue holding the economy back credit card interest rates. Where is protection of our citizens from usury?...or is their any such thing as usury. When people are subjected to rising credit card interest, how can they possibly pay off or down their cards so they can buy? Hey, it's about time the US faces the real problems in our economy and do something correct the inequities that abound. It's special interest that controls Washington and Obama is as much subject to it as is everyone else in Congress. So much for "Change!"
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11-13-2009 @ 6:09PM
Richard said...
Ok we all know barack has generally speaking the blacks...The hispanics and the youth votes to name a few... But Hey all you young supporters....Listen to Nancy Pelosi..and barack Obama..You will pay for insurance one way or the other and if you don't you will face quite possibly jail time....Hummm.Hummm. Hummm
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11-13-2009 @ 1:29PM
Jerry said...
How can people continue to look at "New Unemployment Claims" still running at more than 500,000 and cheer that the number is falling... from 505,000! In other words, the Titanic is sinking at a slower rate, so let's celebrate.
Unfortunately, the 15 million unemployed people in America may never be re-hired. Companies plan to live without them, and if they ever decide to hire again, they will start over with cheap college grads who will take $25K a year to start, or bring in more H1B Visa holders from India and work them to death at $15K a year until they go back home. So the 15 million will be bulldozed into a mass grave forever by corporate America.
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11-13-2009 @ 1:31PM
Steve said...
Warren Buffet made a comment last night that a recession is an investor's friend and a time to make a lot of money. If I understand his point, he was referring to the mass psychology of fear and how that can be used to invest at the right time. He said he made the most money in 1954 in the middle of a recession, which, if I am correct was under Eisenhower. People who make money study history and learn about mass psychology. They could care less about politics, unless it impacts their wallets. A quick review of history reveals that the stock market has always gone up farther in a democratic administration--a fact. You who hate can sit on the sidelines and complain while others are making money. This article points out that the majority of Americans believe the recession is ending and recovery is in the future. It won't happen overnight, but it will happen.
Stay ignorant and angry. I need the money.
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11-13-2009 @ 1:37PM
leigh said...
There certainly is something hokey going on with this market. The disconnect between wall street and the consumer it is ridiculous. Consumer confidence gets crushed and the market goes up 100. Unemployment is over 10% and the market is just rockin'. B.S., I say, People talk about manipulation of the oil markets, I think it is far worse with the stock market. When you have Goldman's CEO saying he's doing God's work, you know something bad is going to happen. What a pompous ass.
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11-13-2009 @ 1:43PM
W. C. Peterson said...
Remember Dick Cheney saying 'Deficits don't matter'? Back in the high-flying days when we had an actual MBA in the White House (just a couple of years, ago. Really) we started two wars and almost crashed the world's economy. George Waste Bush left a lasting legacy of incompetence, waste, and fraud that will take decades to recover from. And the chicken hawks blame Obama, who we hired to clean up the mess..
The Republicans are in deep denial over what their people caused. Maybe twenty years out of power will do them some good, but I doubt they will learn the lessons they need to be a real political party. I'm glad I switched parties last year.
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11-13-2009 @ 1:47PM
Rob said...
There is no revived economy... The 3.5% increase in third-quarter U.S. GDP as evidence of the recovery's start, is a bogus report... 2.0 % of this was based on housing that was artificially inseminated with the tax credits sending investors (more likely government and union employees) to scoff up some deals for 25 cents on a buck. They threw Ford in there... excuse me, cash for clunkers was also artificially stimulated.
This administration and their in the pocket media are attempting to do damage control... Joe Biden declared we were in a recession just 3 weeks ago...
They might get to creating jobs one day... but for the most part most have either left or have gone out of business... They also reported layoffs are getting better.... claiming several 500K was less than the 523K they expected. The next day they reported it to be 190K... The liars can't remember the lies... Don't stock up on canned goods because they reported them as bad for your health lately.
Safe Bet.... Buy Ammo! Turn the news off...
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11-13-2009 @ 1:50PM
todd said...
watch the unemployment rate shoot up when they start paying out the new extension next week .
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11-13-2009 @ 1:52PM
chris shannon said...
I FIND THIS INFORMATION WAY OFF IN NUMBERS . WHAT DO THEY REALLY MEAN BY """ JOBLESS CLAIMS """" ? IS IT UEMPLOYMENT CLAIMS ?? OVER 5000 THOUSAND MORE PEOPLE ARE LOOSING THEIR JOBS AS I SPEAK . SO HOW CAN THESE SO CALLED MATHMETICIANS SAY OUR UNEMPLOYMENT HAS ALMOST CAME TO A STANDSTILL ? MANY LOCALITIES AREN'T POSTING THE REAL TRUTH BECAUSE THE OBAMAMA RESHIME IS TELLING OUR STATES TO BE VERY CONSERVATIVE WITH THOSE NUMBERS IN FEAR OF CAUSING THE STOCK MARKET TO PLUMIT ...... MORE AND MORE PEOPLE ARE BEING LAIDOFF . SO IF SEVERAL COMPANIES HIRE ONLY SEASONAL PERSONEL AND THEN LAY THEM OFF IN JANUARY ,, WHAT WILL THE UNEMPLOYMENT NUMBER LOOK LIKE THEN ??? IT'S GONNA SPIKE .. ALL I CAN ADVISE TO THOSE WHO ARE LUCKY ENOUGH TO STILL HAVE A JOB IS TO CUT YOUR THANKSGIVING AND CHRISTMAS SPENDING ABOUT 65% . YOU BETTER HOLD ON TO IT BECAUSE YOU VERY WELL BE THE NEXT IN THE UNEMPLOYMENT LINE . WHO CARES ABOUT THOSE RETAILERS . YOU ALL NEED TO LOOK OUT FOR YOURSELVES AND YOUR FAMILIES .. THOSE COMPANIES DON'T REALLY CARE ABOUT YOU , THEY JUST CARE ABOUT YOUR MONEY .. ENOUGH SAID !!
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11-13-2009 @ 1:56PM
Wendell said...
Will you people please just relax? Obama is trying to get us all an equal share of the pie. So stop whining just because the pie is disappearing. Isn't it better to get an equal share of the crumbs, than to have anyone getting more of the filling?
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