Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Consumer Confidence Falls Another 9% in December

Thursday, January 3rd, 2013
By for Profit Confidential

In the U.S. economy right now, consumer confidence is bleak and consumer spending is dismal, meaning the idea that we are experiencing economic growth is simply far-fetched.

Consumer confidence in the month of December continued its decline from the previous month. It fell to 65.1 in December from 71.5 in November—a decline of almost nine percent. (Source: The Conference Board, December 27, 2012.) Why did consumer confidence fall so much in December? Of those who replied to the consumer confidence survey, 18.7% of them expect their income to decline, 27.3% believe there will be fewer jobs for them, and 35.6% believe it is difficult to get a job.

If consumer confidence is low, U.S. consumers will spend less. Generally, November and December of every year tend to be good months for retailers because of the holiday season. During this time, consumers spend and buy goods. But this year, retail sales were far from robust.

According to MasterCard Advisors’ SpendingPulse, from October 28 to December 24, holiday-related sales only rose by 0.7%. During the same period last year, the sales rose two percent. (Source: The Globe and Mail, December 26, 2012.) This is significant, because retailers generate about 30% of their annual sales during the holiday season, and the majority of the time, this same period accounts for 50% of their corporate earnings.

ShopperTrak reported retail sales declined 2.5% and foot traffic decreased by 3.3% during the week ending December 22, 2012 compared to last year. (Source: ShopperTrak press release, December 27, 2012.)

Right now, consumer confidence in the U.S. economy is very weak. As I have been harping about in these pages, if we want economic growth, consumer confidence must increase. But consumer confidence is stuck, because unemployment is high, real incomes are falling, and personal savings are declining.

Where the Market Stands; Where It’s Headed:

  • The Great Crash of 2014

    A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

    In fact, we are predicting this crash will be even more devastating than the 1929 crash...

    ...the ramifications of which will hit the economy and Americans deeper than anything we've ever seen.

    We feel so strongly this is going to happen, we've produced a video to warn investors called, "The Great Crash of 2014."

    Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

    To see what's so urgent, click here now.

I give very little credence to yesterday’s up-shot day for the Dow Jones Industrial Average. The market’s reaction to the pathetic fiscal cliff deal was one of relief that spending was cut. I expect 2013 to be a very difficult year for the stock market.

What He Said:

“Interest rates at a 40-year low: The Fed has made borrowing as easy as possible, resulting in a huge appetite for loans and mortgages. We are nearing a debt crisis.” Michael Lombardi in Profit Confidential, April 8, 2004. Michael first started warning about the negative repercussions of then-Fed Governor Greenspan’s low interest rate policy when the Fed first dropped interest rates to one percent in 2004.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Michael Lombardi - Economist, Financial AdvisorMichael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Some of the stock recommendations in Michael's various financial newsletters have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland. Follow Michael and the latest from Profit Confidential on Twitter or Add Michael Lombardi to your Google+ circles