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As Consumer Confidence Surges In The US, It Plummets By Largest Amount In 19 Years In UK

Tyler Durden's picture





 

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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Fri, 01/28/2011 - 08:49 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Very interesting to note the Surging and Plummeting headlines on most ZH articles now-a-days. And it's not shrillness on purpose. Just such a sign of our times, de-sensitized, so need to be poked harder.

And anyone who had visited London in the last 15 years could see why the country is in a shambles.

24 hour poobs finally did em in.

Grab me a warm, frothy one.

Surge/Plummet! I'm sure the American consumer is surging because they are being fed the all's getting better lie + a voracious consumption habit is hard to break.

ORI

http://aadivaahan.wordpress.com/2011/01/27/wisdom-for-warriors-6/

Fri, 01/28/2011 - 08:49 | Link to Comment dcb
dcb's picture

gotta love our markets, the worse the data the more they move up.

Fri, 01/28/2011 - 09:01 | Link to Comment dryam
dryam's picture

Fake it until you make it, and the U.S. can fake like no other country on this planet.

Fri, 01/28/2011 - 08:50 | Link to Comment HamyWanger
HamyWanger's picture

Are you saying the US consumer should not feel confident???

Record corporate earnings, equities at pre-crisis levels, sounds like a recovery to me.

Fri, 01/28/2011 - 09:08 | Link to Comment topcallingtroll
topcallingtroll's picture

Hamy may be right. Keep an open mind.

Fri, 01/28/2011 - 11:15 | Link to Comment LowProfile
LowProfile's picture

Heh, Hamy knows that consumer confidence has a 1:1 correlation with the DOW...  He's just pullin' your leg.

Third leg.

Fri, 01/28/2011 - 09:13 | Link to Comment AnAnonymous
AnAnonymous's picture

With a few billions more in debt. Which is the sign of recovery.

The very day the debt starts to decrease on regular basis, run to the hills.

Going down into debt is usually healthy when it comes to consumption. Going out a bit less.

Fri, 01/28/2011 - 10:35 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

Sure, ride the wave

... till it crashes on the beach.

Fri, 01/28/2011 - 11:37 | Link to Comment asteroids
asteroids's picture

Go back and look at thenews reports. British sentiment was flying as well a few months ago until it crashed. Same will happen here.

Sat, 01/29/2011 - 04:58 | Link to Comment Hephasteus
Hephasteus's picture

Don't forget record corporate earnings while 43 million americans are on food stamps. So that's like winning the gold medal at the olympics with an arrow in your ass.

Fri, 01/28/2011 - 08:50 | Link to Comment Cookie
Cookie's picture

OT

getting warmed up in Egypt

http://www.bbc.co.uk/news/world-middle-east-12303564

 

Fri, 01/28/2011 - 08:54 | Link to Comment firstdivision
firstdivision's picture

So now Ayman al-Zawahiri's old crew is about to become even more powerful in Egypt.  This is a good thing (sarcasam). 

Fri, 01/28/2011 - 08:52 | Link to Comment Bubbles...bubbl...
Bubbles...bubbles everywhere's picture

The UK is not "identical to ours". When they win their own wars, then they can aspire to be "like us". Also, they like soccer.

Fri, 01/28/2011 - 08:56 | Link to Comment firstdivision
firstdivision's picture

..and their beer warm, drive on the wrong side of the road from the wrong side in their car, do not care about oral hygene, love chips (they're freedom fries you blokes), have dumb named money (it doesn't weight that much), and name their clocks instead of their cocks.

Fri, 01/28/2011 - 09:05 | Link to Comment topcallingtroll
topcallingtroll's picture

I thought everyone named their cocks! But i agree about oral hygiene or really a lack of orthodontic care. It is so distracting when i watch british and canadian news, but they are starting to do better.

Fri, 01/28/2011 - 08:59 | Link to Comment Ben Graham Redux
Ben Graham Redux's picture

Consumer confidence is not at multi-year highs - it's still below April's reading.

Fri, 01/28/2011 - 08:59 | Link to Comment It is a bargin ...
It is a bargin my friend's picture

"...aspire to be like us"...now thats comedy, well done you

Fri, 01/28/2011 - 09:00 | Link to Comment Racer
Racer's picture

The US ABC Confidence figures didn't surge at all when they came out last Tuesday in fact they fell back again and have been bouncing around that level for ages now.

But of course they are reported out of hours so don't count and aren't fiddled

Fri, 01/28/2011 - 09:00 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

the UE and those who gave up seeking jobs, are optimistic..yep that's change I can believe in. report what you want the sheep to think it usually works.

Fri, 01/28/2011 - 09:06 | Link to Comment ak_khanna
ak_khanna's picture

The consumer confidence is unlikely to rebound soon in developed countries because they cannot create jobs in their own country as the major multinatio­nal companies have permanentl­y shipped the manufactur­ing jobs and service jobs to the low cost developing countries to maximize their own profits.

http://www­.marketora­cle.co.uk/­Article219­32.html

The protection­ism and currency wars to save local jobs are likely to intensify causing great damage to the earnings and living standards of a majority of the world population reducing their ability to spend drasticall­y effecting all asset classes.
http://www­.marketora­cle.co.uk/­Article245­81.html

Fri, 01/28/2011 - 09:09 | Link to Comment Ferg .
Ferg .'s picture

I'll never understand why investors pay attention to consumer confidence . It's a pretty shoddy metric . You're surveying a very small subset of the population who may or may not have any background in finance/economics/business . Answers are simplistic ( responses to questions can only be one of the following : positive , negative or neutral ) and are not based on quantitative data but more on  " gut " feelings and observations . You might as well knock on my door at 7 a.m Monday morning and ask me about the week's weather prospects .

 

To my knowledge however the University of Michigan / ABC versions are more credible .

Fri, 01/28/2011 - 09:19 | Link to Comment ageofreason
ageofreason's picture

I'm still waiting for my call to take this survey.....

Fri, 01/28/2011 - 09:30 | Link to Comment tmosley
tmosley's picture

Not so sure about that consumer confidence, given that APMEX is now OUT of non-numismatic Silver Eagles.  They had, what, a million at the start of the year?  Further, they only have something like 60 regular maples left.  The rest are all "special", higher priced items.

Looks like they still have quite a few generic rounds, and quite a few mid sized bars. (exactly 1 comex deliverable bar).  Best pick them up while you can.

Fri, 01/28/2011 - 09:40 | Link to Comment connda
connda's picture

The sheeple are out spending the money they no longer use to pay on their mortgages while they’re waiting for foreclosure or Debt Jubilee. They’ve got more "stuff" so life is good!!! They have drank the Kool-aid. That is, until they are kicked out onto the street and simple luxuries like affordable food becomes a problem. Perhaps things will become more "Egypt-like" when Joe Six-pack has his butt kicked a couple more notches down Maslow Hierarchy of Needs. For now – Sleeeeep Sheeeep…

Fri, 01/28/2011 - 09:45 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

In an "economy" like the UK, that is dependant totally on the welfare state,the housing market and consumer spending(in that order) it is like the US in that the consumer IS the economy,a fall like this means the patient is flat lining. 

This is at a time of QE from the Bank of England in the form of £200 billion and a roughly 30% devaluation of the pound,what happens next then Merv?Print another few hundred million and devalue sterling another 20-30% and you will find the vicious spiral of devaluing the currency leads to more imported inflation and then a gilt strike means you will have to print ALL UK government debt.

The UK economy makes Greece, Ireland and the US look paragons of financial virtue and  bright prospects for economic recovery,ignore any media reports you read about the UK economy recovering and file them with those from The Bernank telling you he isn't monetizing the debt and is 100% confident of withdrawing the stimulus before it causes inflation.

Fri, 01/28/2011 - 10:33 | Link to Comment Midas Mulligan
Midas Mulligan's picture

+1 milord.

Fri, 01/28/2011 - 10:53 | Link to Comment Josephine29
Josephine29's picture

Actually there has been bad news from the UK housing market too in the past day ro so. According to one economist.

For me more worrying is Hometrack’s report that house prices have fallen for the seventh month in a row and by 0.5% in January so far . I have written before that I feel that this is going to be a hard year for the UK housing market. Please do not get me wrong it needs a downward adjustment but my fear is that this adjustment could accelerate in 2011 and there is a danger of it becoming something of a rout. I wrote an article elsewhere back in December about the Bank of England’s withdrawal of its Special Liquidity Scheme  and the impact I feel that withdrawal around £9 billion per month is likely to have on the availability of credit in 2011 and in particular on mortgage finance. I feel more and more that this move was and is a policy error.

 

His track record is pretty good so it looks as though the UK housing market is in for a tough 2011.

http://notayesmanseconomics.wordpress.com

Fri, 01/28/2011 - 10:31 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

"As Consumer Confidence Surges In The US"

... Toward The Cliff And Likely Over It

 

There.  Fixed it.

Fri, 01/28/2011 - 13:41 | Link to Comment TruthInSunshine
TruthInSunshine's picture

USA closely following in England's footsteps, with a delay of about 50 years?

The two most heavily indebted consumer nations in the world, by a large margin - check

Both seeing much of their industrial base lost to foreign competitors due to inane government policy & out of control unions - check

Both seeing massive expansions of their entitlement & defense spending, as a % of their GDP, especially during waning years of growth - check

Both seeing massive hiring by local, state and federal government, with a devastating effect on the national budget, giving rise to another constituency of politicians (the government worker constituency), to the detriment of private businesses and consumers? - check

Both relying on the Roman Empire technique of expansionary military conquest, for a time, to try and hold their fleeting hegemony together - check

Both also relying on the Roman Empire technique of 'bread & circus' to keep the plebes content for as long as possible, in order to ensure the BSDs get little heat - check

Both having large numbers of legislators corrupted and compromised by private enterprise and foreign interests, in exchange for monetary renumeration or by threat of blackmail - check

Fri, 01/28/2011 - 10:55 | Link to Comment Northeaster
Northeaster's picture

Maybe this has to do with other factors, but entire divisions were wiped out this week at IBM. Architects and engineers are now answering customer service calls. I "guess" they could be happy that they still have a job, and that helps with "confidence". Meanwhile, the reality is a complete morale dump, along with disbelief as to what occurred this week.

Fri, 01/28/2011 - 12:52 | Link to Comment Mariposa de Oro
Mariposa de Oro's picture

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

Do not underestimate the amount of Hopium that can be mainlined into the sheeple via a smooth voice and teleprompter.  The sheeple will be so high on Hopium, they'll never noticed what's happened around them until TeeVee delivery device coughs and dies.  THAT'S when the Hopium wears off and the eyes will open. Not before.

Fri, 01/28/2011 - 14:03 | Link to Comment Futurist
Futurist's picture

What do you mean the UK same as the US: "except for all the pervasive data manipulation". We have CPI, green shoots of recovery and idiots from Labour (socialist) saying don't stop spending you will derail the recovery.

From Labour's perspective they are right: the recovery in growth of government, the recovery in the increasing government spending programs.

Our jobless situation suffers from the same: if you are not claiming benefits you are not umemployed nonsense.

Also in the UK we have the City, where Wall Street goes to hide from regulation for example AIG financial products (Mayfair) and those great auditors Ernst and Young for Lehman Bros with repo 105s.

It's all connected in labyrinthine worthless paper, bumper bonuses and fees...

Fri, 01/28/2011 - 14:04 | Link to Comment Futurist
Futurist's picture

What do you mean the UK same as the US: "except for all the pervasive data manipulation". We have CPI, green shoots of recovery and idiots from Labour (socialist) saying don't stop spending you will derail the recovery.

From Labour's perspective they are right: the recovery in growth of government, the recovery in the increasing government spending programs.

Our jobless situation suffers from the same: if you are not claiming benefits you are not umemployed nonsense.

Also in the UK we have the City, where Wall Street goes to hide from regulation for example AIG financial products (Mayfair) and those great auditors Ernst and Young for Lehman Bros with repo 105s.

It's all connected in labyrinthine worthless paper, bumper bonuses and fees...

Fri, 01/28/2011 - 14:05 | Link to Comment Futurist
Futurist's picture

What do you mean the UK same as the US: "except for all the pervasive data manipulation". We have CPI, green shoots of recovery and idiots from Labour (socialist) saying don't stop spending you will derail the recovery.

From Labour's perspective they are right: the recovery in growth of government, the recovery in the increasing government spending programs.

Our jobless situation suffers from the same: if you are not claiming benefits you are not umemployed nonsense.

Also in the UK we have the City, where Wall Street goes to hide from regulation for example AIG financial products (Mayfair) and those great auditors Ernst and Young for Lehman Bros with repo 105s.

It's all connected in labyrinthine worthless paper, bumper bonuses and fees...

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