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Highlights
Consumer confidence is unusually low, at its fifth all time worse reading in 40 years of Conference Board data. The Conference Board's consumer confidence index literally plunged in June, down nearly 8 points to 50.4. The expectations component is at a record low of 41.0, down more than 7 points, with the present situation at 64.5, down nearly 10 points for its worst reading since the early part of the ongoing expansion in 2003. But there is an expansion still underway and this is not a time of war, which makes the results difficult to figure.
For a second month in a row, all five sub-components show more pessimists than optimists in what is a very rare statement of discontent. Current employment is the most closely watched sub-component and is pointing to trouble for the month's payroll report with those saying jobs are hard to get way out in front of those who say they are plentiful by 30.5 percent vs. 14.1 percent. This is an extremely wide spread for this reading. Future job expectations show pessimists out in front by 35.5 percent vs. a tiny 8.0 percent who are optimists. Business conditions readings are abysmal and point to yet further wide erosion in future reports.
Inflation expectations are severely elevated but at least unchanged at 7.7 percent for one year out. Inflation is a key reason behind the severe reaction underway in the consumer. Buying plans for cars fell further while home buying plans are steady at record lows. These results and similar results from other consumer confidence surveys contrast in the sharpest way with strength underway in retail sales, reported just this morning in the weekly chain-store reports. Federal stimulus checks may be giving a lift to the consumer but it's only going to be temporary, and these results suggest that underlying confidence will turn on the jobs market. The dollar dipped as did Treasury yields in immediate reaction to the report.
The Conference Board's consumer confidence index remains at dismal levels and even continues downward with the main index falling nearly 5 points in May to 57.2, the lowest reading since 1992. But more importantly, 12-month inflation expectations swelled to 7.7 percent, up 9 tenths from May. The consumer confidence report appears to be pointing to the increased likelihood of moderate stagflation.
Consumer confidence Consensus Forecast for June 08: 56.5
Range: 51.0 to 63.3
![[Chart]](http://www.nasdaq.com/econoday/reports/US/EN/New_York/consumer_confidence/year/2008/yearly/06/chart.gif) | Typically retail sales will move in tandem with consumer optimism - although not necessarily each and every month. |
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