Barataria has asked the question several times before – given that things are a lot better than they have been in a long time, why are people so down on the economy?
After posing a few potential reasons, we may have the answer – it was largely an artifact of the presidential campaign. That would make the most sense given that the Conference Board index of Consumer Confidence has hit 104.1, the highest it has been since 2007. Combining that with a strong net approval rating for President Obama, which has been tracking around +8 (52 approve, 44 disapprove) and we have the net positive we should expect.
Will this transfer over to Sec. Clinton in time for the election? Given her performance at the first debate, the answer is that it should. It’s all coming just in time.
The news today is the Consumer Confidence survey. The rating, normalized to 100 when the modern survey started in 1985, is the result of a series of questions on the state of 3,000 households which return a detailed survey. It is considered comprehensive, and it allows them to not only give us a headline number but a detailed reason why it is up or down.
Those details were spelled out in their press release by Lynn Franco, Director of Economic Indicators at The Conference Board:
Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market. Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.
In other words, the increase of 14.5 million jobs since the low in 2010 has finally caught on.
In might be more fair to compare the net number of jobs to the last time the Consumer Confidence Index was this high, at the start of 2007. This was before the first hint of a crisis came in August and just before the famed housing bubble started to burst. That gives us a net increase of 7 million jobs. Given that the total number of workers has increased slightly, it makes more sense to look at the comprehensive U6 unemployment figure since that time:
At 9.7%, we’re not quite back to the 8.4% from 2007. But given that the survey asks respondents to look out six months, they may be pretty close to on track. People do have hope for the future and it shows.
Where has this confidence been for the last year? That has been a big mystery overall, given that things haven’t improved that dramatically for a while. It shows in the chart above. The anger and resentment we have seen running very hot through this campaign has actually been out of step, but it may be explainable. After all, people tend to notice what’s happening around them more once they get out of survival mode and actually develop worse feelings about the world.
Take that new attention to the world and feed into it a necessarily downer of a story, fed by those who are running from the outside, and you have a recipe for bad feelings.
Through all of this, President Obama’s approval rating has been rising steadily no matter what the rhetoric has been. It now stands around 52% approval, a net of +8. That’s the highest any president has experienced at this point in their term, which is a positive sign. People do understand what it means to have a firm hand on the tiller guiding the ship of state, and they appreciate it.
Which naturally brings us to the next President. For a period of time it appeared that Clinton in a landslide was the story. For many reasons, the polling has tightened substantially. It all comes down to the debates in this election cycle for one good reason – it always does. Clinton was able to stand up there, look healthy and look presidential. The rest is really just the daily oatmeal that gives reporters paychecks.
The anger of the last year of election cycle appears to have largely burned itself out. The story that everything is bad and getting worse simply isn’t playing as it once did. That’s not to say that everything is great, of course – the best way to report it is that the glass is half full. This is what you’d expect at the rough turning point between the dying off of the old economy and the start of the new cycle, which is still on track to come to fruition sometime next year.
That will happen when everyone really looks around and sees plenty of opportunity through the lifting fog of risk. That is when the next economy really forms.
Today? Confidence is back, and that will make all the difference. It’s just in time for Clinton and it’s just in time for this nasty business cycle, an economic winter, to finally thaw. It’s not that everything is fabulous, but there’s certainly nothing better to look back on. Consumers are finally getting their confidence back and that is what we’ve been waiting for.