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.

Confidence in a Police State?

A number of articles and opinion pieces are making a big deal out of the fact that Congress's approval rating is at an all-time low, according to a new Gallup poll. The fact that the presidency and Congress is so low seems to me to miss the point. The point seems to be that Americans have lost their confidence in the pillars of our republic.

Americans expressing a great deal of
or quite a lot of confidence in …

Military 69%
Small Business 59%
Police 54%
Organized Religion 46%
Banks 41%
U.S. Supreme Court 34%
Public Schools 33%
Medical System 31%
Presidency 25%
Television News 23%
Newspapers 22%
Criminal Justice System 19%
Organized Labor 19%
Big Business 18%
Congress 14%

Americans have little trust in the three branches of government that define our government. Congress, the presidency, and the Supreme Court have a combined approval rating of 73% - a rating just barely better than that of the military alone.

What does this suggest? What is the real story? It doesn't take a great leap to suspect that Americans are at the stage of serious flirtation with the idea of a police state. Weary of democracy, we are ready to hand ourselves over to the guys with guns, like Spain under Franco. Unable to export our own democracy to Iraq, we’re now leaning towards simply throwing it away. One can't help but wonder whether we might find ourselves in a police state should the combined approval rating for our three branches of government should ever slip below that of the military.

As a side note, only 34% of Americans still feel a great deal of confidence in polls, a number you’ll never see reported by the pollsters for obvious reasons (and, of, course, the less obvious reason that I simply made up the number).

Curiously, Gallup failed to inquire about the level of confidence in blogs, an institution apparently too new to deserve its own score. it may be that the sarcasm, wit, and insightful prose of bloggers is the only thing that now stands between us and a coup in which the military is welcomed as leaders.