Americans' confidence in the economy plunged the lowest in eight months in May, showing new concerns about a soft jobs market as housing and stock markets paint a broader picture of economic instability.
Ironically, the dismal economic outlook is creating more enthusiasm for Tampa’s biggest party, the National Republican Convention in August. Major national polls show a growing majority of Americans feel the country is headed in the wrong direction and the Republican Party plans to use their Tampa convention to showcase their political plans for turning things around.
A private research group, The Conference Board, said today that its Consumer Confidence Index now stands at 64.9, down from a revised 68.7 in April. The CCI May figures show the largest drop in consumer confidence since October 2011 when confidence in the U.S. economy lost 6 percentage points, according to a report posted Tuesday by The Conference Board.
The pessimism comes despite gas prices easing, suggesting Americans are not comfortable with the overall economic recovery that Washington claims has been underway for several years.
"Consumers were less positive about current business and labor market conditions, and they were more pessimistic about the short-term outlook," said Lynn Franco, director of economic indicators at The Conference Board.
Consumer confidence is considered a major economic indicator since consumers account for roughly 70 percent of economic activity. Experts say 90 percent represents a positive or healthy economy. The latest reading is still well above the 40 percent reading last October. Consumer confidence bottomed out at an all-time low of 25.3 in February 2009.
The survey conducted from May 1 through May 16 with about 500 randomly selected people nationwide suggests that "the pace of economic growth in the months ahead may moderate," according to Franco.
For his part, Mark Vitner, an economist at Wells Fargo, said May's reading is disappointing, but consistent with the sluggish economic recovery so far.
"In some ways, it's a microcosm of the whole economic recovery," he said. "Every once in a while hopes are raised that things are getting better and then the bottom seems to fall out again."
Friday, when unemployment figures are released, the unemployment rate is expected to remain at 8.1 percent for May with an increase of 160,000 jobs, according to FactSet. That would top April's gains but fall well short of the approximately 240,000 jobs required for consecutive months that would move unemployment figures in the right direction.
Complicating bad news on the jobs front, the stock market in May is projected to turn in its worst month since last September. Meanwhile, the global economic slowdown is spreading beyond Europe to rapidly developing countries like China, raising fears that U.S. companies could pull back on hiring as demand weakens for their products. Along with a stalled economy, many consumers are seeing their retirement plans shrink as the stock market loses value.