At first, we thought it might have been a blip, a short-term thing, something to do with the winter weather which was gorgeous in California, though some folks in the East were getting lots of exercise shoveling what seemed like endlessly renewable snow. And we might have blamed it on the margin of sampling error.
In early January, the economic confidence of Americans had reached the highest level since before the Financial Crisis, according to Gallup’s Economic Confidence Index. But then it began to drop. At the time, the weather was blamed for everything. But spring should have turned it around. Only it didn’t.
Economic confidence continued to zigzag lower in an orderly fashion, interrupted only by a sudden plunge and some upticks too. And today’s weekly index hit the worst level since October last year, with the three-day rolling average dropping to the worst level since September.
The index is a composite that tracks how Americans perceive current economic conditions and future economic conditions. It ranges from a maximum of +100 (everyone says the economy is “excellent” or “good” currently and is “getting better” in the future) to a minimum of -100 (everyone says the economy sucks and is going to suck even worse).
During the Financial Crisis, the bottom fell out of the index until it hit an all-time low of -65. Then “green shoots” started sprouting in the minds of more and more Americans, and by early 2011, the index reached -18 before re-plunging to -54 in the fall as a result of the debt-ceiling fight and talk of default. After the Congressional charade was over, economic confidence reemerged from purgatory.
By mid-2013, the index hit a lofty -3. But then another debt-ceiling charade kicked it back down to -39. This too passed. In 2014, the index wavered mostly between -21 and -14, until October when it began rising sharply. By early January, it hit +5.
And that was it. The weather or something was starting to get Americans down, and it wasn’t just for a week or two or a month a two, and it wasn’t within the margin of error, but it has lasted the entire year so far. The index has now dropped to -12, the lowest since October last year.
“This was the result of 25% of Americans saying the economy is “excellent” or “good” and 30% saying it is “poor,” Gallup explained. The three-day rolling average hit a low point of -17 during the July 12-14 period, the worst level since September.
This is the dismal trend so far this year of the Economic Confidence Index:
Gallup blamed Greece. The extortion racket over Greece was carried out in the media, with talking heads from one or the other side proclaiming on a daily basis the end of the world or of whatever, if they didn’t get their way. And this got Americans to think dreary thoughts about the US economy, apparently. But once the crisis was “resolved” with a deal that is totally unsustainable and makes no sense to anyone, and once the end of the world had been averted by Greece staying in the Eurozone for now, the three-day rolling average index ticked up a smidgen.
But the index is a composite of current conditions and future conditions. And the devil is in the details.
Turns out, the index measuring current conditions so far this year has dropped, but only a little, from +3 in early January peak to -5 now, and it actually ticked up this week. But the economic outlook index has swooned from its high in February of +7 to -18 now! That’s a 25 point plunge.
The current score of -18 is based on 39% of Americans saying the economy is “getting better,” and 57% saying it’s “getting worse.” A solid majority of Americans have once again turned bearish on the future of the economy, after all the hype and hoopla in December and early January.
So what painful things are these people seeing down the line? Higher interest rates, as 30-year mortgage rates have jumped well above 4% even before the Fed has begun raising rates? Tightening hiring conditions as companies come to grips with stagnant or declining sales and earnings? Whatever it is that causes Americans to turns bearish on the future of the economy, it has nothing to do with the weather or Greece.
These people are focused on the reality on the ground, and what that reality might look like for them in the future. They’re figuring out that, despite all the hype and proclamations and the record stock markets and booming housing market, reality for them personally simply doesn’t look all that enticing.
It takes a lot of market enthusiasm to just totally give up on the idea of net profits and focus instead on the hope that management comes up with some new and more palatable metrics. But that’s what’s happening. Read… No Growth, No profit, No problem
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“Gallup blamed Greece. ”
Oh really like Americans have deep ties to Greece? Maybe some Americans realized that we may end up in the same boat as the GrEEKS? Not. It was tons of snow earlier this year. Guess next month Gallup will blame China or something. These dumb excuses aside – maybe Americans sense that we never really got out of the Great Recession and may be tip toeing back to another recession?
I don’t have a lot of confidence in the future and the political environment has a lot to do with it. The working class has had a generation of stagnation and financial disaster. The current bunch running for office is the same bunch that presided over the mess. Nothing new or good can be expected from them. I’m speaking of both parties.
The economy is good for some but not for the majority of us. For the last seven years we have been scraping by and that is not going to change for the better, and we know it. The TPP is another giant rip off coming our way to go along with Obamacare. We can’t trust the govt, the media, or the financial sector, that’s what’s going on.
I have already decided that I am leaving this country the first chance I get. Growing up I felt wonder at the various stories told to me about the wonders of the United States and the American Dream. They were damned lies. The disparity in treatment of classes of people is criminal.
Have a lot of money & connected in government? Rob the public coffers! We will cover your back! Oh, you want to do the right thing? You must not be from around here. We don’t like your kind.
Stealing something petty or stealing to keep food on the table because the jobs out there don’t pay enough prepared to have your life destroyed. Have fun losing your job & trying to find another one with that record, even just an arrest that was later dropped. Oh, and because many states punish indigents by them subsidizing their own prosecution-bail, court fees, their PUBLICLY-APPOINTED ATTORNEY, fees for their probation. Fees fees fees! If you can’t pay the fees, we will see you in jail again at a higher price to the taxpayer then just dropping the fees or giving more time for payment. Its madness.
BTW, I am not condoning crime, but why do the small timers get burned, while the demons run amok? And of course there are exceptions to both scenarios. Not all rich people don’t get prosecuted and many ordinary folk are not stealing out of necessity.
Nothing about this country gives me the warm-tinglies inside. I was raised with a lot of hokem that did nothing but make the reality of our state harsher. For instance, I work private medical transport transporting very sick and broken people between facilities. Watching how the system treats the people who fall through the cracks is life-draining. People are seen as dollar signs and given just enough treatment to avoid legal issue- not that these unpeople could have anyone fight for them anyways. Hurry up and treat them so we can get another body on the floor and do it all over again.
Our company will give us sub-par equipment and rickety trucks to transport these folks (I always pray they don’t disintegrate in an emergency). The company exploits inexperienced EMTs and medics by not providing them adequate training and then sends then into sticky situations without back-up from the company if something goes wrong. They don’t care. They have hundreds of millions of privately held insurance and a small army of lawyers. Oh, that EMT wanted to be a doctor? Well, that mark on her record for her bad decision stemming from inexperience will ensure she doesn’t.
I could go on and on… and on. I have seen enough of how greed distorts everything that I could write a Woody Guthrie song. I can’t wait to get out of here. I am saving my money and building my connections. I am going somewhere where people care about each other.
“There is more selfishness and less principle among members of Congress than I had any conception of, before I became President of the U.S.” – James K. Polk (1845)
The economy has been good for investors and people in the tech and health care sectors. The Obama Administration and the Federal Reserve have seen to that. For the rest, who form a large majority of the population, the economy has sucked big time since 2008, and will continue to suck well into the future.
Obama’s push for more trade agreements has reminded people that even though trade agreements may benefit corporations and wealthy investors, these same trade agreements bring devastating economic destruction to vast numbers of people.
So it’s pretty easy for the majority of people to see that their economic future is going to be far worse than it is right now.
So Keynesian economics a no go? Darn it! I could of sworn the fed inflated housing so people will only afford food and transportation.
But I guess when rent, food, healthcare inflate as well the consumer just gets priced out.
It was just Keynesian wetdream as good luck CBs of the world in controlling the inflation monster when it rears its ugly head as you are well beyond the 8 ball when you try to tick up the rate to control it.
What may be around the corner is global STAGFLATION – stagnant economy with inflation. Last time we experienced it was in the late 70’s due to OPEC embargo and Volcker had to tame the inflation with shock therapy of high interest rate where the mortgage was in high teens.
THERE IS NOTHING ON THE HORIZON THAT IS GOING TO MAKE ANY OF THIS BETTER IN THE NEAR TERM, PERHAPS IN ANY TERM.
2LT Dennis Morrisseau USArmy [armor – Vietnam era] retired. POB 177 W Pawlet, VT 05775 802 645 9727 email@example.com
” Tightening hiring conditions as companies come to grips with stagnant or declining sales and earnings?……”
What is worrisome here is that this is a self-fulfilling prophesy. Due to reduced hours and wage stagnation the majority of Americans are consuming less. They simply haven’t got the money to spend. Business’s response to that has been further reductions in hours and further downward pressure on wages. We are heading for something like a downward spiral and the fools who are supposed to lead us are exacerbating the problem. This will not end well.
Bawahahaha. ‘The Greek Situation’? Oh, man, that is just too funny. Nobody in the US gives a rats a$$.
The optimism over the last six months of 2014 was due to the drop in gasoline prices.
However, once it became obvious that would not last, followed by prices starting back up again…Game Over.
This is another order of magnitude worse than the 70s. Even at the height of the Carter nonsense I never felt that it was insurmountable. While first hand observation on the ground is partly responsible, I believe the zeitgeist is largely responsible. People are hard- wired with “gut instincts”, a pre language holdover that picks up on threats to their person or family. We have become insulated from relying on this danger sense by the mirage of civilization and it has become muffled and many tune it out. They do so at their peril, and once the veneer of civilization is ripped away (assuming they don’t die in the transition) this danger sense will come to the fore.
Have you heard of the Archdruid Report? That blogger has written about a slow decline of current civilization and cites to the Roman Empire. It seems that barbarians may have had sharper instincts than the late Romans.
Does it matter? This is Amerika. High confidence -> Buy Stuff. Low confidence -> Buy Stuff. It reminds me of when i went back to get my master’s degree in Machine Learning. We were given a project utilizing Amazon data pairing customer id (no names, etc, just id) and item id (again no item name, description, etc) and we were told to build a predictive model on whether customers would buy the item. Just predicting Buy gives you as 92% accuracy. Most complex models delivered worse performance.
Wolf you have some of the most astute commenters in the blog world. The mood in this thread is one of the best barometers of how bad things are going to get.
It’s so bad out here, I have been rereading my Roman history, especially Tacitus a historian from the late era. Here are some of his most famous quotes:
“To plunder, to slaughter, to steal, these things they misname empire; and where they make a desolation, they call it peace.”
“All things atrocious and shameless flock from all parts to Rome.”
“The more corrupt the state, the more numerous the laws.”
This is what Tacitus was writing at the end of the Roman Empire, does it strike a bell?
Overlay graphs of the Federal Government’s fiscal consolidation and consumer debt data Wolf to see what the sectoral balances might be saying.
Gas hit 2 bucks a gallon, yet consumer goods pricing kept charging upward. People lost half their equity, got saddled with hc costs, incomes are down, poverty income jobs are based on 12 hours weekly instead of 40 hours. Luxury good sales are increasing, economic gap is increasing, those evil overpaid telephone call center unions were farmed overseas, boomers with pensions are dying. Where is the surprise here?
Confidence up -> Buy. Confidence down -> Buy. This is Amerika!!!!
As a life-long member of the working-poor class whose honest labors doing the jobs needed doing to keep society operating at a day-to-day level my prosperity, what little it was, has steadily declined until I can envision nothing but poverty during my last decade or so of life.
I believe that the USA has been in a state of full-scale class warfare since 1973 or so and Google image search “income inequality” results seem to verify my belief.
Pondering the past present and future I ask myself “What will be the spark that ignites the much-needed Revolutionary War Two?” I hope it arrives so I could assist that worthy cause that needs a cohort of new Founders to guide us to tear down the unrepairable old and start anew with the Constitution as a base and with modern affairs ensuring that base is not used and abused allowing the few to lord over the many with tyrannical efficiency.
Let it come.