Tuesday, June 29, 2010
Can the June decline in this measure of consumer confidence (from 62.6 to 52.9) really be the cause of today's stock market plunge? I doubt it—it's more likely investors getting cold feet after seeing China's stock market fall to new lows. As this chart shows, confidence is a volatile thing and only takes on significance when a trend is apparent. If there's any trend in place over the past year, it is upward, so to me that says the June datapoint was just one of those random blips. And in any event, it's natural for consumers to be concerned and confused in the early stages of a recovery, especially this one, since the recession was unusually harrowing. Once burned, twice shy, as the saying goes.
Posted by Scott Grannis at 9:27 AM