Here’s a troubling indicator: U.S. consumer confidence is sagging just as European consumer confidence is surging. We’re losing our swagger as Europe is getting its swagger back.
After rising for most of the year, U.S. consumer confidence fell for the second consecutive month in September to a five-month low, according to a widely watched index from the University of Michigan. The Conference Board (a private research firm that produces another oft-cited index) and a recent survey conducted by CNBC found similar results. In the CNBC poll, 61 percent of Americans expressed a downbeat view on the current state of the economy, a 5-point increase from three months ago.
Americans are growing more worried that their personal income won’t keep up with inflation, that higher interest rates will make economic growth sag, and that the Washington budget wars will lead to an economy-battering partial shutdown of the government.
Yet in Europe, the skies are clearing. Consumer confidence in the United Kingdom rose to the highest level in six years as real-estate prices bounced back and spending ticked up.
Why is this happening? In part, because Europe is emerging from darker times. While the U.S. came out of the Great Recession in 2009, much of Europe suffered through a double-dip recession. Economic crises in Greece, Ireland and other countries threatened to be contagious. That sent confidence reeling in the Old World.
Talk about role reversal. For some time, it seemed, U.S. hopes for a robust recovery were being held back by the risk created by the economic failures of Europe. Now it looks like the public perception here is that our problems are homegrown. The political firmament in Europe looks more solid, buoyed by this month’s election success of German Chancellor Angela Merkel.
The consumer confidence measures are important because they tend to signal if shoppers will buy and businesses will hire. Economists pay attention to confidence indicators not just for what they show about today, but for what they suggest about the future. A decline suggests that buyers and employers may hunker down in the months ahead.
Fair warning to the White House and Congress: People are paying attention. Your bitter and senseless political warring is giving them reason to worry. The decisions you make in the next few days on federal spending and the debt ceiling will have economic ramifications that ripple for months.
In other words, wake up.Chicago Tribune