This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
I have confidence in sunshine
I have confidence in rain
I have confidence that spring will come again
Besides which you see I have confidence in me
-from The Sound of Music (music by Richard Rodgers, lyrics by Oscar Hammerstein II)
Ah, if only life were a Broadway musical!
Despite predictions of increasing consumer confidence, the Conference Board reported this morning that Consumer Confidence dipped in September. The numbers weren't terrible (53.1 in September from 54.5 in August), but analysts had predicted that confidence would actually increase to 57. That would have helped build on the theme that the economy is getting less bad, which is good, so now we can celebrate!
Not so fast - consumers are hip to that old story. It's true that we're all quite pleased that the economy didn't enter a ten-year depression - that explains why confidence numbers have doubled since hitting the "Armageddon is coming" low in February. But for every piece of "the worst is over news" that is reported, here's what most consumers are facing as the evaluate the economic landscape:
• Employment is shaky at best: on Friday, the Labor Department will likely report that new job loss is tapering off, but the unemployment rate is nearing 10% fast. Until workers feel more secure in their jobs and the unemployed can actually find work, people will not trust the recovery.
• House values are down: This morning, we got the cheery news from Case-Shiller that home values declined less than forecast. Read through the report and you will find what every homeowner knows: average prices are now back to autumn, 2003 levels.
• Homeowner equity has declined from nearly 60% in 2005 to 43% today: Even if you were never interested in selling your house, it sure made you feel better to own more of it. Of course this hurts even more if you have a big fat loan outstanding or if you are upside down on your mortgage.
• Dow 10,000? So what!: Sure, the stock market has rebounded, but the 10,000 level gets us to where we were in...1999! Investors are delighted that the March 401 (k) statement is behind them, but they know that we're a long way off from getting back to 14,000, the level reached just over two years ago.
•Household debt: We know that too many people borrowed too much money, but what about the increase in personal savings? Evidently, it's not enough to melt away the mountain of debt just yet. Household debt remains at 122% of Gross Domestic Product.
It just may take Maria Von Trapp and the Von Trapp children to get us out of this funk!