After the release of unemployment figures last week, its effect on consumer confidence has been instant, with a big drop on Michigan’s Consumer Sentiment Index to 64.6 from last month’s 70.8. It was forecast by the economists surveyed by Bloomberg to fall to just 70. From Bloomberg:
Unemployment last month rose to the highest level since 1983 while lower home values and rising gasoline costs are eroding Americans’ wealth. The report signals that consumer spending, which accounts for about 70 percent of growth, may remain subdued even as the economy starts to recover.
This negative reading also contributed to the decline in the major markets, pushing them to potentially close for another week on the downside. I can only think that unemployment rate was the leader and its fall helped the other numbers to be negative. The public can remain hopeful only for so long and until the numbers improve, one of them unemployment, consumer confidence will not see much improvement.
More on the report HERE.