You Say Things Are Getting Bad But Wall Street Marches Higher – What Gives???


by Bob Adelmann


Is the stock market real? Not according to consumers.

With the stock market steadily marching higher and setting new all-time highs (on a nominal, not inflation-adjusted basis), does this reflect what’s really going on in the economy? Not according to 5,000 households who were quizzed by the Conference Board. They published the results yesterday and they are just plain ugly, there’s just no other way around it:

The Conference Board Consumer Confidence Index®, which had improved in February, declined in March. The Index now stands at 59.7 (1985=100), down from 68.0 in February. The Present Situation Index decreased to 57.9 from 61.4. The Expectations Index declined to 60.9 from 72.4 last month.

These are huge drops. 1985 was selected as the base line year as it was between a peak and a trough. We haven’t seen 100 in years. The last time was in January, 2007. The survey asks about current conditions, as well as expectations for the future. Both are down significantly. Lynn Franco, a director for the Conference Board, summed things up:

Consumer Confidence fell sharply in March, following February’s uptick. This month’s retreat was driven primarily by a sharp decline in expectations, although consumers were also more pessimistic in their assessment of current conditions. The loss of confidence, particularly expectations, mirrors the losses experienced this past December and January. The recent sequester has created uncertainty regarding the economic outlook and as a result, consumers are less confident.

The declines occurred all across the board. Those saying business conditions are good declined from 17.6 percent to 16 percent, or just one in six. Those seeing conditions as bad rose from 28.2 percent to 29.3 percent or nearly one in three. Their perception of the job market declined as well, with those claiming jobs as plentiful dropped from 10.1 percent to 9.4 percent.

The future looks gloomy to these folks as well. Those expecting business conditions to improve over the next six months decreased from 18 percent to 14.4 percent while those expecting them to worsen increased from 16.6 percent to 18.3 percent.

There’s more bad news in the survey but you get the point.

The other consumer sentiment index that people look at is issued by the University of Michigan and its baseline year is 1964. It’s monthly reports are based on 500 phone calls to households instead of 5,000. That index last saw 100 in January, 2003, and it now stands at 75.

There’s a severe disconnect between Wall Street and Main Street and it seems that it’s getting larger.


A graduate of Cornell University and a former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at, primarily on economics and politics. He can be reached at


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