OK. Score one for the Bears

     As we noted yesterday it is very hard to do economic forecasting. While there are some bullish indicators-yesterday we had strong auto demand driving better July sales than expected-today we got some real bearish indicators as consumer confidence, according to a new report on CNBC.com, is at it's lowest level since April 2009.

     http://www.cnbc.com/id/44325909

    "Consumers' confidence in August dropped almost 15 points to the lowest level since April 2009 as worries about the economy fueled the wildest stock market swings since the financial meltdown in 2008. "

    Talk about whiplash! Yesterday's July numbers would have seemed to suggest the opposite. I mean how do you square consumer confidence in August being the lowest since April, 2009 with those strong July consumer spending numbers?

    "U.S. consumer spending rebounded strongly in July to post the largest increase in five months on strong demand for motor vehicles, a government report showed on Monday, supporting views the economy was not falling back into recession.."

     http://diaryofarepublicanhater.blogspot.com/

    Consumers in August "lack confidence" after in fact spending the most in 5 months in July. Is it possible for consumers to lack confidence while in fact spending confidently?

   Or have things suddenly changed in August dramatically? Well let's look a little more at the tape...

   "The Conference Board said Tuesday that its Consumer Confidence Index fell to 44.5, down from a revised 59.2 in July. The number was the lowest level since April 2009 when the reading was 40.8. It also is far below the 53.3 that analysts had expected. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

  

   A number of factors contributed to the index's decline. The Conference Board Index—based on a random survey of consumers sent to 5,000 households from Aug. 1 to Aug. 18—captured the wildest week on Wall Street since the financial crisis in 2008.

  Four days into the survey period, on Aug. 5, S&P downgraded the U.S. federal debt and concern revived about the health of European banks. Following that, The Dow Jones industrial average had four consecutive days of 400-point swings for the first time in its 115-year history during the week that ended Aug. 12.

  Besides debt talks and market fluctuations, Americans are still plagued by old economic worries. The nation's unemployment rate is stuck at 9 percent. Home values remain weak. And shoppers are facing rising costs for everything from food to clothing as retailers try to offset their higher costs for labor and materials. "

   Some of these worries like S&P downgrade, etc, will probably recede soon. In a way it's hard to imagine that your "consumer in the street" personally makes buying decisions on a S&P downgrade but by now it ought to be clear that in any case the downgrade has not caused the sky to fall.

   The fact that the Conference Board Index was subject to such wild fluctuations may explain some of it for sure. It may be that consumers-like the market-hasn't known what to think about a lot of the constant earth shattering developments and assumes the worst at first but then has time to reconsider.

    This has certainly been the behaviour of the market recently, which after selling the house initially after S&P's downgrade has rallied back strongly.

    The concern about jobs is understandable though this concern is nothing new. Certainly Obama's new job proposals couldn't come at a better time.

    So the picture as usual is mixed. All I will say is it's possible things could be turning around. And for the short term, stocks themselves look good. Today is a case in point, the market has now shrugged off the bad news and has gone green again-for now.