While economists agonize about unemployment, jobs created, money supply, stimulus, and the budget deficit, they often ignore one number that will in all likelihood matter most to voters in November.
Consumer confidence numbers have been slipping since reaching an anemic high back in February of 2012 according to several measurements of consumer confidence, including the Bloomberg Comfort Index. .
“The index, which asks people to rate the national economy, their personal finances and the buying climate,” reports Bloomberg.com “declined for the third consecutive week. About 56 percent of people rate their personal finances negatively, up from 47 percent three weeks ago and the highest level since last November. The economy added just 115,000 nonfarm jobs in April, the smallest increase since November.”
The index now stands at -40.6.
And it has established a trend that should be worrying to the president.
Bloomberg says that the “measures for registered Democrats and independents have dropped the most over the past two weeks after both reached the highest levels in more than four years.”
Translation: After buying from the White House more of the same Hopey-slash-Changey rhetoric that “the recovery has finally started,” even supporters are recognizing that on economics, this White House hasn’t a clue.
At this point, it’s highly unlikely that even a monetary stimulus will make the type of fleeting impact that can boost consumer sentiment between now and the election. And besides: Who would listen to Obama sing Happy Times are Here Again, again?
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How many times as Obama declared that the “recovery” has finally arrived?
We’ve had the same failed Recovery Summer three years in a row, and the odds are that this year will make it four.
In February of 2011, Obama bragged in his State of the Union address: “We are poised for progress. Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.”
And indeed the economy has grown again, but then, it stopped growing and started up again, then slowed down again. The economy has a way of starting and stopping when the White House is hostile to policies, like, um- I don’t know- stable oil prices, anyone? that fosters actual economic activity.
In 2010, he made the same recovery pitch, in a different way: “But understand – understand if we don't take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery – all of which would have an even worse effect on our job growth and family incomes.”
Well he sure was right about that. His own myopic vision on the debt “thing” really has damaged our markets at the expense of the economic recovery
And finally, this year he’s hailing the recovery as something “built to last.”
Built to last? What? Like the Chevy Volt? Obama hasn’t even been able to make it a full year without an economic catastrophe. And that’s even if you add up the months of economic growth for his entire presidency non-consecutively.
All that stop-and-go growth hasn’t translated into, you know, actual jobs, income, housing for the rest of us.
The Conference Board, which publishes the most widely followed index of consumer sentiment, said “Consumers’ outlook for the labor market was less upbeat. Those anticipating more jobs in the months ahead decreased to 16.9 percent from 17.4 percent, however, those anticipating fewer jobs decreased to 18.0 percent from 18.5 percent. The proportion of consumers expecting an increase in their incomes declined to 14.0 percent from 15.5 percent.”
The Board’s confidence measure remains under 70 at 69.2. The century mark is considered pivotal to an incumbent president’s reelection chances.
The Wall Street Journal reports that one economist says that the confidence numbers are a good predictor of the election results for incumbent presidents. By that measure Obama’s re-election is far from assured.
"There is plenty of time for the national mood to change, but the decline in income expectations is particularly telling," Steve Blitz, senior economist at ITG Investment Research last year told his clients according to the WSJ. "When the income up percentage is on the downswing, incumbents do not get re-elected."
The Journal cites loss of consumer confidence and high unemployment for the defeats of incumbent presidents Jimmy Carter and George H.W. Bush.
“A soft economy kept the U.S. consumer sentiment index low prior to former president Jimmy Carter's failed re-election bid in the early 1980s and George H.W. Bush's failed bid in the early 1990s [Eighteen months before each election it stood below 100: at 76.4 in May 1991 and at 96.0 in May 1979.],” says the Journal.
“Just like Carter and Bush senior, Obama is likely to face an unemployment rate that is higher than 7.5% in the months before the next elections.”
And while I expect the economy will enjoy a fall revival, it will, in all likelihood, not be enough to save this presidency.
Thankfully.
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