Consumer Confidence Remains Hardly Confident

"The Conference Board?Consumer Confidence Index??fell in September to 98.7, from an upwardly revised 105.6 in August. That is the sharpest decline in almost three years.

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell by 10.3 points to 124.3.

The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined by 4.6 points to 81.7, but remained above 80 (phew, close call — a reading below 80 usually signals a recession ahead.)

The 35–54 age group has become the least confident while consumers under 35 remain the most confident (probably because they don't know any better...yet). Confidence declined in September across most income groups, with consumers earning less than $50K experiencing the largest decrease.

Despite slower overall inflation and declines in some goods prices, average 12-month inflation expectations increased to 5.2% in September. Meanwhile, about 48% of consumers expected stock prices to rise over the year ahead."

Clearly there were a lot of declining metrics in this latest data...with the exception of inflation, where consumer expectations actually went up, and the stock market, where people still expect (and need) the stock market to go up over the next year.

What could possibly go wrong with this set up?

The trends continue to point to a slowing overall economy, and a recessionary environment for the median-income-and-below consumer.

Even the Fed has effectively told us with this latest 50bps cut they are more worried about unemployment trends going forward and "recalibration" is needed.

And yet, the silence in the financial markets remains deafening.

But I guess recalibration doesn't apply to the stock market (in my opinion, one of the last bastions of inflation)...does it?

I see a lot of experts citing historical levels of employment and other economic data points to make their Goldilocks case. But I contend it is not the absolute levels we should observe, but the rate of change in those levels.

We shall see...