I've published on this subject previously and reflecting-upon recent gains in the investment markets, a reasonably robust jobs report, the peace process (or lack-there-of) for the Iran war why are the people seemingly down on their economic situation and possibly even a wee bit grumpy?
Consumer sentiment has dropped again. According to the University of Michigan, the Consumer Sentiment Index fell to 48.2. from 49.8 in April. The numbers are preliminary and subject to revision; nevertheless, this is the second consecutive all-time low in a data set that has been collected since the late 1970s.I look at the economic world through the eyes of a recovering financial advisor and while I'm not wearing rose-colored glasses my sense is that excepting for global economic instability and rising energy costs as a consequence of the Iran war, economically-speaking, things are generally OK.
What gives?
Seems like the culprit are those nagging exceptions; namely the war, inflation due to energy costs and tariffs along with generalized economic uncertainty; all of which conspire to create bad vibes that bleeds into weakness in the mood of consumers. This is important as the lion's share of our domestic economy is driven by consumers and their consumption.
According to the survey's director, Joanne Hsu, the drop is; "Owing to a surge in concerns about high prices both for personal finances as well as buying conditions for major purchases." One-third of respondents mentioned gas prices as the biggest cause for concern; and another one-third cited tariffs.
Stock indexes held positive in the wake of this news; and the Bureau of Labor Statistics reported that job creation was stronger than expected in April with non farm payrolls rising by a modest 115,000 and unemployment holding steady at 4.3%. A recession is presently a low-probability event. Further evidence that things, economically-speaking, are generally OK.
My sense is the weakness in the Michigan survey numbers reflect public opinion in light of soaring prices for gas and diesel at the start of the summer travel season. Consequently, there is a political shadow over all of this. People are pissed-off and tiring of the drama have contracted a case of Trump fatigue. And I get it; we just purchased airline tickets for a family vacation and with the cost of jet fuel doubling it's not a cheap date.
My preference is for policy that improves your and my prosperity and general lot in life. Along with making the world a safer place; so, where’re we at?
On one hand the stock market is on an absolute tear, with the NASDAQ up 5% last week and nearly 13% year-to-date. The proximate causes include a shaky cease-fire with Iran, a 28% surge in S&P corporate profits for the first quarter and some consensus-beating economic reports, like Friday's payroll numbers.
On the other hand, there is this.
The Strait remains off-line, inflation is up, Iran holds all of its enriched uranium and President Trump's war has set in motion a cascade
of destabilizing events that have all manner of consequences for global
stability, security and the world economy.
Meanwhile there is a billion dollar+ ballroom, a triumphal arch, a glowering visage of Trump on passports and national park passes and a no-bid, resort-blue paint job for the historic Washington Monument Reflecting Pool.
It's a mixed message for sure.
Good grief....
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