Confidence plunges, inventories barely grow

The preliminary Aug UoM confidence figure, which mostly captures the craziness of the week and certainly the week before as the survey likely ended this Wednesday, fully reflected the change in mood falling to 54.9 from 63.7 and well below the unrealistic expectation of a dip to only 62.0. It is the lowest since 1980. Current Conditions fell 6.5 pts and the Outlook was down by 10.3 pts. One year inflation expectations though didn’t change at 3.4%, still remaining above its one year average of 3.0%. Bottom line, the lowest confidence in 31 years speaks for itself but there is no question the sharp selloff in asset markets around the world over the past few weeks, on top of an already fragile economic picture, had a major influence on today’s reading. In terms of the market, consumer confidence is a reflection of things rather than a driver of them as consumers don’t always act as they feel and it’s why confidence figures are rarely market moving.

Business Inventories in June rose just .3%, the slowest pace since May ’10 and below expectations of a rise of .5%. On the heels of the higher than expected Trade Deficit, it likely clinches a downward revision to Q2 GDP to below 1% vs the initial reading of 1.3%. Sales rose .4% and the inventory to sales ratio held at 1.28, off the recent low of 1.25 in March.

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