Good economic news:
Consumer confidence extended its rebound in May, soaring to the highest level since September as shoppers are seeing glimmers of hope for the economy.
The Conference Board said Tuesday that its consumer confidence index, which had dramatically increased in April, zoomed past economists’ expectations to 54.9 from a revised 40.8 in April. Economists surveyed by Thomson Reuters were expecting 42.3. The reading marks the highest reading in eight months when the level was 61.4. The levels are also closer to the year-ago reading of 58.1.
Nice to read this, considering the news this weekend was about a new wave of foreclosures hitting those who were previously considered safe lending risks. That was so depressing I chose to ignore it. At any rate, Wall Street is reacting favorably.
scav
delusion sells. oh goody. If the next best thing is a delusion bubble then we are nowhere near peak wingnut.
zzyzx
This is completely and utterly offtopic for everything but I still have to post this just for the insanity, two people were playing a bizarre strip game near Tacoma. They were throwing rocks from an overpass onto I-5 and every time they smashed a headlight, they’d (or I suspect in reality, the other person) had to remove an article of clothing. That’s a really weird game.
Michael
The Dickensian reality that was being constructed very nearly swept us all away.
1. The deflationary pressure in real wages was masked by the creation of bubbles in finance that were midwifed into existence via political “conservatism”, primarily in the GOP. The S&L catastrophe (which had been the inevitable burst of the bubble which fueled the Reagan popularity), the bursting of the dot com boom/bubble (there were some good parts there) and the housing bubble were all indicative of it. Had the bubbles not been in play, Art Laffer’s deflation would have decimated all but the topmost tier of the status quo.
2. As regulations and statutes rolled back, voluntary ethical constraints on the controllers of large blocks of capital (both equities and real estate, particularly commercial) disappeared. The concept of having “enough” was like a never-attainable event horizon. At the same time, the controllers of large amounts of capital devoured the businesses that actually produced goods and services by expecting unreasonable and unsustainable rates of return.
3. Everybody forgot the notion that while markets are fairly efficient allocators of items which are discretionary for consumers, they’re not nearly so good on necessities like energy commodities or in dealing with the aftermath of catastrophe.
4. The current economic crisis is the result of the Laffer can being kicked too far down the road.
Graeme
Anyone who buys into the market based on these consumer confidence numbers is going to lose money in the short term.
Even if consumers are confident, there are far fewer with money to spend.
It’s going to be another bad xmess season for retail. More bankruptcies and lost jobs to start the year in 2010.
That’s my guess, anyway.
Comrade Darkness
It’s good to see people loosening up a little. I hope it’s the households with already net positive cash flow, rather than the ones desperately in need of paying down debt.
But, given charts like this one on *prime* mortgages going into foreclosure. I call sucker’s rally.
The Cat Who Would Be Tunch
@Graeme:
Here are some interesting tidbits to back up your “guess”.
Unemployment has already hit 8.9%. The CBO recently revised it’s number for peak unemployment down from 9.5% in 2010 to 10.5%.
Over half of the banks require higher credit scores in order to get a credit card.
Oil’s got a big bounce recently – the price has increased from $34 to $60 per barrel.
The FDIC will most likely require a bailout (yes, I said ‘FDIC’). They expect to lose $70 billion in the next five years, which was recently revised upward from $65 billion.
The second fact in particular is most intriguing considering the rebounding consumer confidence. How are consumers supposed to spend when credit is becoming scarcer? Doesn’t take a rocket scientist (or hell, even an economist) to tell you that we’ve got some more ways to go.
barkleyg
I don’t give a poop to what the economists, or public opinion says; until we stop losing 500K+ jobs a month, we aint going nowhere. Eventually, there will NOT be enough employed people to buy whatever crap we want them to buy.
Here is the link that John mentions in the article.
Let me provide some choice paragraphs from the article, in their order of
appearance.
In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.
With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.
“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”
Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year
From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.
During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.
Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.
Last year, foreclosures expanded sharply as the economy shed an average of 256,000 jobs each month. Since then, the job market has deteriorated further, with an average of 665,000 jobs vanishing each month.
Among prime borrowers, foreclosure rates have been growing fastest in states with particularly high unemployment. In California, for example, the unemployment rate rose to 11.2 percent from 6.4 percent for the year that ended in March, while the foreclosure rate for prime mortgages nearly tripled, reaching 1.81 percent.
In Minnesota, three of every five people seeking foreclosure counseling now have a prime loan, according to the nonprofit Minnesota Home Ownership Center.
So, as I said originally, their aint no hope for our economy until we drastically reduce the month rate job losses, and until we start having a positive number regarding employment, instead of the ugly unemployment
number we hear monthly.
Remember, under Bill Clinton, the economy showed a net increase of 24 Million jobs during his 8 year administration. Put another way, we had monthly job growth of 250,000 a month for every month Clinton was in office.
bago
I get the feeling that people would really like for this long national nightmare to be over. (quote: The Onion) Too bad reality is harder to write to than a headline.
fledermaus
I wouldn’t put too much stock in “Consumer confidence” numbers. It’s a vague and wishy-washy metric that is easily manipulated.