May found a drop in consumer confidence hot on the heels of proposed further increases in interest rates as well as the inflated cost of housing. With the cost of big-ticket items like cars, homes, and luxury items dwindling there is a large right of it impacting the economic growth of the US.
A survey from the Confidence board was released on May 31st, and it indicated how consumer confidence and spending on big-ticket items were small. The Federal Reserve’s idea to institute aggressive monetary policies to slow demand is finally showing signs of an impact.
Jennifer Lee is a senior economist at BMO Capital Markets in Toronto. Even she seems to be waiting for the other shoe to drop in the US economy. “We can never underestimate the U.S. consumer. But plans to pull back on purchases, and become a little more cautious, is something that the Federal Reserve would welcome as it aims to cool demand.”
In the release of the numbers, the Confidence board announced a decline to 106.4 rating for May. They also announced a correction to the April data, going from 107.3 to 108.6 which made the descent a bit steeper. Overall, this figure is still heads and shoulders above pandemic lows.
The University of Michigan does its own survey on the subject as well. Their system accounts for the labor market as well, whereas the Confidence board does not. As many would expect their rating places consumer confidence far lower. So low that it reaches an 11-year low. Given the response of the market to the changes Biden and his cronies keep failing to properly execute, it’s not a surprise the rating is low.
The labor market differential comes from data on the views from respondents about how plentiful or hard to get jobs are. In April they returned a 44.7 rating. In May it dropped to an abysmal 39.3. This marks the first time in a year that the ranting fell below 40. 12.5% of consumers voted those jobs are hard to get in May, but only 10.1% felt the same back in April.
Considering the drop in jobless claims from people falling off and the increase in positions being posted by companies, it signals why the Confidence board is comfortable with the way things are looking right now. Noting that “they do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run.” This kind of push is a strong signal that things are rebounding, but the American people aren’t buying it.
Unconfirmed reports, unscientific reports, and anecdotal cases about the job market have been coming out since things first reopened under President Trump. Many people who had lost their jobs to the pandemic reported that many employers were simply paying too much for the level of experience they were looking for. These unrealistic expectations led to many companies crying that there are jobs available, but nobody wants to work.
What’s even worse are the reports of people interviewing for work but being declined despite being overqualified and interviewing very well. These employers would just let the vacancy sit wide open, or just wait to get paid money for being understaffed from government programs. These problems are still going on, so it’s no wonder the people don’t trust the figures coming out.
All of this combined with the stock market and the bearish territory is pointing toward a massive recession on the doorstep. When you consider the housing market in the great depression vs the market now under Biden, we are in serious trouble. He has been doing nothing but trying to steer the ship into the rocks. It’s time for a change at the helm, but is the second in command truly prepared for the task?