Four confidence indexes released in just two days signal a bumpy ride for the U.S. economy–and unemployment is the primary driver of market uncertainty on the road to recovery.
Among financial advisors, confidence in the economy and the stock market continued to lose traction in August, sinking to its lowest level in the last 16 months, according to a Rydex|SGI AdvisorBenchmarking survey released Monday, August 30. The Advisor Confidence Index (ACI), a benchmark that gauges advisor views on the U.S. economy and stock market, posted at 93.80 in August, down approximately 9% from 103.12 in July.
But the Conference Board's consumer confidence index, released Tuesday, August 31, improved moderately in August after declining in July. The index now stands at 53.5, up from 51.0 in July and 52.9 in June. The present situation index decreased to 24.9 from 26.4. The expectations index increased to 72.5 from 67.5 last month.
Either way, concerns about the lackluster U.S. jobs market depressed both the advisor and Conference Board indexes.
"Consumer confidence posted a modest gain in August, the result of an improvement in consumers' short-term outlook. Consumers' assessment of current conditions, however, was less favorable as employment concerns continue to weigh heavily on consumers' attitudes," said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. "Expectations about future business and labor market conditions have brightened somewhat, but overall, consumers remain apprehensive about the future. "
Advisor confidence, which declined in July, decreased more dramatically in August as advisors' outlook for the U.S. economy grows increasingly pessimistic–largely reflecting fears about the weak job market, said Maya Ivanova, a market research manager with Rydex|SGI AdvisorBenchmarking and Investment Advisor's monthly Practice Edge columnist.
"The number in negative territory was not surprising, but we have seen that even though advisors are pessimistic on the current, six-month, and one-year outlooks, they are neutral in their stock market outlook. The main reason for the negativity is that advisors are really worried about the job market and unemployment and housing numbers. And consumer confidence remains weak," Ivanova said.
Meanwhile, two other indexes also showed a drop in confidence.
State Street Global Markets' investor index for August 2010, released August 31, showed global investor confidence falling 4.4 points from July's revised reading of 96.5
