Consumer Confidence Dipped Unexpectedly In June

According to the Conference Board, consumer confidence in June dipped unexpectedly, and that's supposed to be the cause for today's sizeable dip in the stock market.

The Conference Board Consumer Confidence Index™ Retreats (6/30/09 The Conference Board)

The Conference Board Consumer Confidence Index is based on a monthly survey of 5,000 U.S. households. The Conference Board says in the above announcement that consumer sentiment soured in all parameters:

• Consumer Confidence Index in June was 49.3, down from 54.8 in May
• Present Situation Index in June was 24.8, down from 29.7 in May
• Expectation Index in June was 65.5, down from 71.5 in May

Consumers' assessment of present and future situations in business conditions and job prospect deteriorated, with increasing number of people answering conditions are bad/will get worse, while number of people answering conditions are good/will get better decreased.

But wait, haven't we been told that consumer confidence is a lagging indicator, along with unemployment data? We've been told over and over again that these two indicators remain bad even after the underlying economy has turned around. So why worry if the numbers are bad?

I personally believe that an effort to relate economic news of the day to the day's stock market movement is utterly futile. Economic numbers, whether they are unemployment numbers or quarterly GDP numbers, are interpreted by market participants AFTER the fact. Let's say unemployment number is announced and it's bad, or worse than expected. But for some reason that day the market goes up. The commentary at day's end is "The market looked past the unemployment number, which is a lagging indicator...". If the market goes down, then the commentary becomes "The market went down amid worries about deepening recession..."

So far today, it's the latter. Articles written about consumer confidence as of mid-day all take the latter tone. If for any reason the market turns around and ends up green, the end of the day articles will say the former, "The stock market looked past worsened consumer confidence in June..."

The market does what it wants to do (or what its big participants want it to do - have you seen this from Zero Hedge?). As of 9:50 AM PST, Dow Jones Industrial Average is down 108 to 8,421 (-1.26%), S&P 500 is down 11 to 916 (-1.19%), Nasdaq is down 13 to 1,830 (-0.73%).

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