Hard Numbers Up and Soft Numbers Down - Americans Don't Feel So Good About Their Improving Economy

There has been some good economic news of late. And yet, Americans still don't have much confidence in the economy. This week we got some great economic numbers, many the best since the late 1990s. The market's response? The S&P finished down 2.7%, its biggest drop since June 2012. Nobody said this was going to be easy.

Yesterday we learned that GDP grew more than expected in the 2nd Quarter, hitting 4% for only the third time in more than 7 years.

New unemployment claims have dropped to their lowest point since 2008. As demand for employees begins to rise, so are wages. The "employment cost index" in the last quarter rose by the most since 2008.

 Based on performance through the first half of the year, the American economy is on track to create the most jobs since 1999. 

And yet, since yesterday's GDP announcement, the Dow has been down. Gallup's gauge of economic confidence dropped the most since last October's government shutdown. 35% of Americans said the economy is getting better but 60% said it is getting worse. 

If you look at this weekly table for Gallup, you see that all the "hard" data, folks who report being underemployed, or layoffs vs. hiring at their place of work, and how much they've spent - is going up. It's in the green. All the "soft" data, folks reporting on their optimism or how they feel about conditions, is going down. It's in the red. Just in the last week, there's been a rise of 4% in the number of Americans who think the economy is doing worse. This in spite of the data suggesting otherwise.

I'm not sure if the country has a psychologist able to explain this. So far, Gallup's confidence index has been a terrible predictor but it's probably a pretty good gauge of how people feel about what's going on. In the last week, with Russian backed separatists shooting down a commercial airline, Israelis and Palestinians lobbing missiles into each other's neighborhoods, an Ebola breakout in Africa, and the House - again intent on proving their commitment to irrelevant topics - voting to sue Obama, there has been an abundance of "make you feel bad news." Maybe the confidence index could be replaced with a more aptly named, "How ya' feelin'?" index.

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Post-script. I was focused on Gallup's number. The consumer confidence index actually is up to a 7 year high, as befits the "hard" economic numbers.