Consumer Confidence Goes Greek

U.S. consumers are feeling better or worse about the economy in May, depending on whom you ask.

The Conference Board said Tuesday that its confidence index tumbled to 64.9 this month, the lowest level since January. The unexpected drop was in sharp contrast with last week’s jump in the consumer sentiment index put out by Thomson Reuters/University of Michigan. The sentiment index rose to its highest reading since October 2007.

It’s taking the unemployed longer to find a job, but it’s also taking them longer to get discouraged and give up looking.

The increasing length of job searches puts an emphasis on the large numbers of long-term unemployed. But even as the situation remains bleak, the unemployed are sticking with their job searches longer. Prior to the recession the median length of time someone searched for a job before dropping out of the labor force was 8.7 weeks. That had jumped to 21.4 weeks by 2011.

People are staying the labor force longer because it’s harder to find a job. Extended unemployment benefits might also be keeping people tied to the labor force longer. Whatever the reason, it is a good thing that job seekers maintain their attachment to the labor force. Once workers drop out, their ties begin to fray and their skills erode.

Household attitudes are important since the U.S. economy relies heavily on consumers to keep demand growing. And while less confidence doesn’t always mean less spending, there is some correlation.

High debt burdens, depressed home prices, a lack of confidence in the government’s ability to make things better, volatile equity markets and rising student loan balances are bugging people.

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