Consumer Confidence Hits 7 Year High

Have you ever noticed that the consumer is almost ALWAYS wrong?

Yeah, yeah...I know....for those of us who have worked in retail we are constantly told, "The customer is always right!"...and for customer service purposes, he is.  But in the macro economy...the consumer is almost always wrong.

Let's look at just a brief history....

Remember the DOT-COM boom and bust of 1999-2000?  The consumer had just seen the NASDAQ market go up on value about 60% per year for 2 years and they were told that ANY STOCK that played in the Internet was going to double about once every 2-3 years!!  People started making retirement plans for age 35 and the happy days were NEVER going to end!!  Consumer confidence was at an all time high....the American dream was being fulfilled for everyone!!...until it crashed and $billions and $billions of magic money vanished overnight.

Next those poor, burned consumers who told themselves they were done with that crazy stock market...they all piled in the REAL ESTATE market!!  Yep!  They were quite sure that they could NEVER lose money in real estate...because, after all, "they aren't making real estate anymore!"

Of course we know what happened next.  The real estate market went up and up.  People bought $700,000 homes using no money down and interest-only mortgages!  What could possibly go wrong! Consumer confidence in the $millions they were going to make as their home values doubled every few years was off the charts.  People refinanced their homes every few years to get CASH BACK and used that "free" money to go buy new pickup trucks, campers, ATV's and toys!!

And then it crashed....

Millions of folks were underwater on their debt.  They owed more money on the house than it was worth.  In many cases they owed WAY MORE than the home could be sold for.  Millions of Americans went bankrupt, short-sold or just walked away.  Millions more had to cash in all of their savings just to keep current on their home.

So now they learned their lesson on buying too much house....they won't do that again.  Also when the real estate market crashed it dragged the stock market down with it....so there was a double whammy of the 2007-2008 collapse.

Now the poor consumer is turned off of stocks and turned off of real estate....so where should he go?....hmmm....HOW ABOUT GOLD??  Gold has NEVER been worth nothing!!  Look at all the commercials on TV and radio!!  "Buy gold!  It's been the only safe haven for 5000 years!", cooed the announcers!

So of course LOTS of folks bought up gold or gold certificates.  What could go wrong??  Gold was going to be the cat's meow when all the governments of the world printed so much paper money that the system collapsed...and ONLY gold would survive!!

Well....where are the GOLD GUYS now?  Whimpering in the corner....because gold went down 30% in value while the stock market went up 30%.  That means that an investor who put $10,000 into gold and $10,000 into stocks had $7000 left in gold at year end and $13,000 in stocks!

Today we find an interesting headline running around on Google News.

US consumer confidence hits 7-year high in October

WASHINGTON (AP) — U.S. consumer confidence rebounded strongly in October, hitting a seven-year high as solid job gains raised expectations for economic growth.

The Conference Board said Tuesday that its confidence index climbed to 94.5, the strongest reading since October 2007 and the start of the Great Recession a few months later. This month's gains reversed a revised decline to 89 in September from 93.4 in August.

Job gains and falling gasoline prices have helped to improve sentiment, despite muted economic growth in Europe and China that has fueled volatility in financial markets.

Economists project that the gains should continue into October with the addition of 235,000 more jobs, according to the data firm FactSet.

The recent hiring has left more people optimistic about getting a raise. The Conference Board found in the survey for its confidence index that 17.7 percent of consumers expect their incomes to improve, compared to 16.9 percent in September. Meanwhile, the share of Americans expecting their income to drop fell to 11.6 percent from 13.4 percent.

Also, Americans are likely feeling less depleted after a trip to the gas pump. Average gas prices have fallen 31 cents in the past month to $3.03 a gallon, according to the AAA's Daily Fuel Gauge Report, freeing up cash to spend elsewhere.

Still, shopping has yet to accelerate, according to the Conference Board results.

"Plunging gas prices, strong job growth, and rising confidence should provide support for consumer spending in coming months, but for now the buying plans portion of the survey showed high levels of cautiousness continuing," said Morgan Stanley analyst Ted Wieseman in a client note.

Here;  http://www.businessweek.com/ap/2014-10-28/us-consumer-confidence-rose-in-october

So let me ask you a question....is this GOOD NEWS that consumer confidence is at a 7 year high?

We all know that the Federal Reserve just pulled off a Ponzi-scheme of epic proportions.  USA owes $18 trillion and soon all the taxes we collect will only pay the interest.  ISIS is unraveling the Middle East and America seems incapable of dealing with them.  Our churches are failing at alarming rates. Our kids are killing each other in schools almost on a weekly basis.  Most Americans can't name the first 5 books of the Bible.  Divorce is ripping the fabric of our society into shreds.  110,000,000 Americans have contracted a venereal disease.  Gay marriage will soon be legal in all 50 states and we still murder millions of unborn babies....but....

US consumer confidence hits 7-year high in October

What could possibly go wrong?