US Consumer Confidence Light for September
- Consumer confidence misses for month of September
- Largest part of US economy under microscope
- Last significant announcement before FOMC
The Consumer Board Consumer Confidence figures came out on Tuesday, missing quite a bit from the anticipated figures, but it also had a stronger than expected revision from August. Because of this, the market will be focusing on the FOMC more than anything else going forward. That’s because the Federal Reserve could possibly cut rates and then signal that even more is coming.
That may have more of a significant effect on the markets in general than the Consumer Confidence figures. However, it only adds more to the case for loose monetary policy not only in the United States, but around the world too.
Inside the numbers
The announcement came out at 125.9 for the month of September, as opposed to the expected 128.2 figure. This suggests that the consumer is starting to lose a little bit of confidence, which could cut back spending. 70% of the US economy could be affected since this is based on consumption.
Beyond that, the number had been revised from the August announcement of 125.1 towards the 126.3 announcement. This makes for a net change of -2.1 for the last couple of months.
Trouble may be around the corner
If lower consumer confidence becomes more of a trend, it could become a serious problem for markets around the world. The United States has been the loan provider of significant growth lately, with the European Union struggling and the United Kingdom trying to sort itself out with Brexit.
With that being the case, it’s very likely that we will see a lot of “risk-off” trading, perhaps giving a boost to bonds and precious metals. This would certainly weigh upon stock markets, unless central banks around the world start piling into quantitative easing, which is always a possibility.
The lack of confidence is flying in the face of the action in the stock market, showing just how disconnected the stock market has become from the overall real economy. Because of the inflating of asset pricing by central banks, the markets have been distorted to a point where they have almost nothing to do with reality.
That being said, it appears that the people on Main Street in the United States see a completely different picture. In fact, there have been several reports recently which suggest that as many as 70% of the people in the “real world” expect a significant recession in the next year or so. Eventually, Wall Street could catch up.