Consumer Confidence, or Lack Thereof

The bad news in the latest ABC News Consumer Comfort Index: Consumer confidence isn’t getting any better. The good news: Consumer confidence isn’t getting any worse, which is what it had been doing at a breakneck pace earlier this year. The index’s number uses a scale ranging from a cheery +100 to a dismal -100. After hitting -37 in February — its lowest point since 1993 — it has been “stuck in a three-week holding pattern” in which the score has been either -30 or -31. (It’s the latter this week.)

Looking on the bright side, one could interpret the numbers to mean that consumer confidence has bottomed out, at least in the absence of more substantive bad news to push it further downward. As it happens, Gallup’s continuous tracking of Americans’ economic attitudes points in the same direction, prompting the polling firm to say that “for the moment, confidence may have bottomed out.” Here again, though, the numbers of people saying the economy is in good shape are markedly lower than they were at the beginning of the year.

One might say a discussion of whether the glass is half full or half empty is irrelevant if the glass has in fact dropped to the floor and shattered. That’s the sense conveyed by the latest confidence numbers from The Conference Board, which update just monthly and thus miss what might turn out to be insignificant day-to-day static. Its “Expectations Index” component, capturing consumers’ outlook for the economy in the coming months, is at a 35-year low in the report released this week. Thus, even if attitudes have bottomed out, there’s no denying that it’s an awfully low bottom.

If there’s a saving grace in all this, it’s that consumer confidence can be as much a lagging indicator as a leading indicator of the economy’s direction. When ABC’s consumer-confidence number was at a spectacular low in 1993, after all, the economy had already begun a recovery that would turn into the now-much-worshiped 1990s boom.