Tuesday, July 27, 2010

I am sure some reporter will spin this as 'unexpected' news, but I was totally expecting today's report that consumer confidence fell in July.

What is there that would make people confident? Or, if not confident, just less worried than they were in June?

I'm afraid there isn't much.

If people are worried about holding on to their own jobs, there isn't much that has happened that would let people relax. If they're worried about the effect Obama's budget deficits and regulatory attacks are going to have on business expansion, there's no good news on that front. There's no indication that the Democrats are backtracking on trying to do any of the destructive things they want to do. And while there has been some talk about not rolling back the Bush-era tax cuts, anybody paying attention knows that the Democratic leadership in Congress and the Obama White House are dead set in favor of letting at least a good chunk of those tax hikes take effect next year.

No matter how much they think their policies are good for the country, Obama and his crowd ought to be smart enough to know that you don't make people happy by pushing stuff they don't want down their throats... so the relative merits of Obamacare and his fiscal and regulatory policies are less important to the economy than the public's perception of those policies. And as the public's perception of those policies is negative, the public's reaction to those policies is going to be negative.

The public is desperate for some good news, for a sign that things are starting to turn in a positive direction. Unfortunately, as long as Obama keeps defending his policies (as he plans to do for the remainder of the summer), he is not only reminding people of those policies, he is telling them he thinks they are wrong (a terrible way to get on someone's good side), he is reinforcing their impression of him as someone who just doesn't get it, as someone who is woefully out of touch with what they see as reality, and, even worse, he is reminding them of the part they played in giving him the power to do so much bad. All in all, just not what the doctor ordered in the form of confidence boosting exercises.

And as long as the public stays negative, their confidence will stay low... and low confidence manifests itself in the form of no spending, no hiring and no investment.