By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – Even my mouth dropped this morning. Consumer confidence took a nosedive last month. Someone ought to take a side street off Wall Street and get a pulse of what's really happening. I'm Maxine Shapiro with KERA Marketplace Midday.
The when-was-the-last-time-they-were-right economists had expected the consumer confidence index to rise slightly in July to 85 from 83.5. Instead, the closely watched index put out by the Conference Board plummeted to 76.6. That's right - we the consumers were less confident in July than we were in June. Could the nine year high in the unemployment figure have anything to do with this?! You're darn tootin' it does.
The labor market is in its longest slump since World War II. Those people standing on the unemployment line or who know people struggling to find work got a good laugh a couple of weeks ago when the announcement came: the recession that seemingly began in March of 2001 ended in November of that year. 2.5 million jobs have been lost since the 8-month recession began.
But Wall Street just doesn't get it. They're thinking, the stock market is up and everyone should be happy. It's been a pretty decent earning season. A lot of companies are beating expectations and profits are up. But what about revenue? They're flat. So earnings are up in some cases - not because sales are up, but because of cost cutting. And the labor market has been a big chunk of what was cut.
So Wall Street should quit scratching its head over the consumer confidence index and give it a big thunk. The writing was on the wall. The Conference Board released an earlier survey last week reporting more than a quarter of those surveyed don't even find the earnings reports credible and only 22% said they plan to invest in stocks in the next six months. The Kansas City Star pointed out, that's "virtually unchanged from January, despite the market's recent run-up." We all want to feel more confident. We just want it to be real. For KERA Marketplace Midday, I'm Maxine Shapiro.
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