Consumer Confidence Reaches New Low
The Consumer Confidence Index (CCI) is a gauge of American consumers’ feelings towards the current state of affairs in the business and labor market here in the US. In short, it’s a survey of the attitudes of US consumers, their spending plans, expectations for inflation, and where they think stock prices and interest rates are heading.
Consumer confidence fell for a third month in a row, reaching levels not seen since July of 2022. Which is odd because July was actually the best month of the year. But fast forward 60 days and the markets were tumbling.
Consumer confidence as low as today’s staggering new figure has only been seen three times in recent history.
- Once in July of 2022 as I mentioned above
- From 2014 to 2016, consumer confidence bounced around this level,
- And here’s the big one: back in July 2007 leading into the financial crisis.
July of 2007 had a similar story to July of 2022, it was a really strong month for stocks. But fast forward just a few months and the US economy and markets were trembling.
So we can almost think of consumer confidence as a leading indicator with the markets lagging just behind it.
Take a look at the chart:
In addition to confidence falling, US consumers expectations for the next six months also fell to their lowest level since July of 2022.
The conference board also shared that the confidence of consumers earning less than $50,000 per year has stayed relatively flat. However, those with higher earnings have shifted increasingly pessimistic.
So What Does That Tell Us?
The people with money often know what’s going on and what’s going to happen before it happens. So, I tend to trust their insight a little more. And it’s the folks with a bit more extra money that are seeing the writing on the wall and the potential turbulence ahead in the economy.
Poor jobs and income data have also come in to sour the mood further, with both job and wage decreases expected going forward.
Take a look:
This graph shows the expectations of US consumers on the job market and their expectations of higher income in the coming months. And both have been on a decline for quite some time. In fact, it’s the lowest it’s been since 2011.
This is following recent releases of job and wage data released by the federal government.
Let me break this down for you: consumers expect less jobs in 6 months, and they expect their wages to continue decreasing over that time frame.
That doesn’t paint a pretty picture for the US consumer, especially as inflation continues to come in above expectations month-over-month and further erode the purchasing power of our dollars.
Where This Leaves Us
Now, no matter what side of the political aisle you are on, I think we can all agree something needs to change.
Groceries are getting increasingly expensive; I have 7 kids, trust me, it’s not just a talking point. Food, gas, shelter, power, and property taxes are all growing increasingly expensive at a staggering rate.
I think another thing we can all agree on is that the current state of the US economy is not sustainable. We are on a turbulent nosedive and at some point we need someone else to intervene.
Just think about the data I just shared with you. The average American lacks confidence in the US economy going forward. Jobs are expected to decrease, wages are expected to decrease, and inflation is remaining a persistent problem.
Most of us agree, something needs to change…
That’s why most folks (myself included) expect November to be a pivotal election cycle. If we can’t find optimism in any of these areas for the average American consumer, Trump’s chances to win that election will be inflated significantly.
Because whether you love him or hate him, the desire for change is ramping up aggressively right now.
In the meantime, what do we do with our trading accounts for the next 7 months?
Now, I’m not a big gold guy. But this is one reason I have been holding gold lately as a store of value.
It’s also another reason that I feel that energy is well positioned to benefit amid this higher cost environment. As utilities and expenses continue rising, and domestic energy mining halts, we will see energy prices continue to rise.
To your success,
— Nate Tucci
