The Conference Board‘s Consumer Confidence Index for June was 49.3, down from its revised May level of 54.8. Because consumer confidence is a coincident indicator that follows the stock market, Swamp Report did not read much into the previous recent rises and does not now read much into this fall.  However, the pessimism regarding jobs was particularly gloomy:

Those anticipating more jobs in the months ahead decreased to 17.4 percent from 19.3 percent, while those anticipating fewer jobs increased to 27.3 percent from 25.6 percent. The proportion of consumers expecting an increase in their incomes declined to 9.8 percent from 10.8 percent.

Bloomberg’s “confidence index that measures respondents appraisal of current business conditions and current employment conditions also fell and as Zero Hedge points out, is diverging from the current stock market euphoria.

Here’s a chart for perspective on yesterday’s rally inducing consumer confidence release:

Phil Taylor, the options guy, has a couple of thoughts worth reading:

“So we have 60% of the population who haven’t got the brains to know that their home has lost value when 100% of the homes in the US have lost value over the past 12 months.  Not 80%, not 90%, not even 99% – according to Case-Shiller, which is pretty accurate, there is not a single place in the United States where homes have gone up in value since last year.  Now what happens is we go back to the same group (US consumers) and ask then how confident they are and we find that about 1/2 of the people who think their homes are up in value say they are confident about the economy.  Also realize that the rapid rise in foreclosures means that the Gloomy Gus’, who showed up in the last poll, no longer have a phone to answer for the current survey.  No one asks the destitute how they feel about the economy – just the people who are home for the pollsters.  Don’t get too excited about a reading of 54 though, we are down from 120, not 100 so still more than 50% off the recent highs.”

Consumer confidence is a lagging indicator of the economy, while the stock market is supposed to be a leading indicator.  At best, a rising consumer confidence index can be viewed only as confirmation that expectations already priced into stocks are reasonable – not as justification to push them higher…

Consumers were very confident that house prices would keep on rising in 2007 and early 2008.  Just goes to show you how appropriate their confidence often is…

A Gallup poll shows consumer confidence in banks to be at a low. Fewer than 20% of Americans have “a great deal” or “quite a lot” of confidence in the banking system.  (ht bankinnovation.net)