As Consumer Confidence Surges In The US, It Plummets By Largest Amount In 19 Years In UK
Even as the conference board reported that US consumer confidence recently surged to fresh multi-year highs, on who knows what: presumably the fact that ever more Americans are happy that Ben Bernanke can manipulate the stock market higher, it has continued to plunge in the UK, a country which is identical to ours, except for all the pervasive data manipulation. As Bloomberg reports, "Polling firm GfK NOP Friday said its headline measure of consumer confidence fell to -29 in January from -21 in December to reach its lowest level in 22 months." And more: "According to GfK's survey, consumers became significantly more pessimistic about the outlook for the economy in the coming 12 months, much more downbeat about their personal financial prospects, and much more reluctant to make major purchases. "January's eight point drop represents an astonishing collapse in consumer confidence," said Nick Moon, managing director of GfK NOP Social Research. "In the 35 years since the index began, confidence has only slumped this much on six occasions, the last being in the midst of the 1992 recession." And all this happened even before snow caused the UK economy to enter official stagflation. This is simply an advance indication of what will happen in the US once the Fed stops monetizing in June (which it won't), and when the last remnants of the latest bout of fiscal stimulus finally disappear. Unfortunately the government's recent attempt to break the oil price surge, which is the biggest black eye in its attempt to reflate, will fail spectacularly once Egypt formally revolts at some point over the next 6-12 hours.
More from Dow Jones:
The U.K. economy contracted in the final three months of last year, and the sharp fall in consumer confidence makes it unlikely that it will experience a strong rebound in the first quarter of this year.
"January's eight point drop represents an astonishing collapse in consumer confidence," said Nick Moon, managing director of GfK NOP Social Research. "In the 35 years since the index began, confidence has only slumped this much on six occasions, the last being in the midst of the 1992 recession."
Significantly, GfK carried out its survey between Jan. 7 and Jan.
16, before the Office for National Statistics delivered the shock news that the economy shrank by 0.5% in the fourth quarter of 2010.
That news is likely to further weaken confidence in February.
The Confederation of British Industry Thursday said retail sales growth slowed in January, and is expected to continue to decelerate. Its monthly measure of sales volume fell to +37 in January from +56 in December, the weakest reading in three months.
The balance is the percentage of respondents reporting higher sales than in the corresponding period the previous year minus the percentage reporting weaker sales.
"Consumer demand is expected to be weak in the coming months, as the spending power of households is hit by a combination of sharply rising prices and weak wage growth," said Ian McCafferty, chief economic adviser to the CBI. "Retailers can expect a challenging period ahead."
The collapse in consumer confidence will once again raise questions about the wisdom of the government's plans to cut its huge budget deficit, which involve tax increases and spending cuts of some GBP111 billion over the next four years.
All of this is merely a dress rehearsal for what will happen in the US once the sugar high (which is now on its 3rd year) finally wears off.
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