Market Rout Hammers Economic Confidence of Americans

[marmar]

Market Rout Hammers Economic Confidence of Americans
by Wolf Richter • September 1, 2015


It’s a really bad day when the battered Shanghai stock index, down 1.3%, was the best performer of the major markets. The Nikkei plunged 3.8%. The largest European stock indices all lost between 2.4% and 3%. The German DAX, indicator of Europe’s miracle economy, is down 19% from its peak in April.

The S&P 500 dropped like a rock at the open and finished even lower, down nearly 3% for the day and down 10.2% from its high in May – back in an official “correction.”

Turmoil.

That’s the word that is now flying around. NPR tries to soothe the nerves of its listeners with comforting words about not selling during a rout. It’s in the papers. It’s everywhere.

The ugly fact is that since the Financial Crisis, the S&P 500 has rallied only during periods of QE and Operation Twist. But the Fed tapered QE out of existence last year and has been palavering about raising rates for months. And so, after years of powering higher despite a languishing economy, and making everyone smile and nod in a self-satisfied manner, stocks are being stocks again.

.....(snip).....

And Americans are rattled.

Confronted with this market that suddenly redeveloped a will of its own, not just in the US but particularly in China, Americans’ economic confidence is getting hammered, according to Gallup’s latest report.

They haven’t been exactly exuberant about the post-Financial Crisis economy to begin with. Gallup’s weekly survey of economic confidence reached its highest point in January of a still crummy +5 on a scale of -100 to +100. The index hit -65 during the Financial Crisis and took until the end of 2014 to get into positive territory.

But it didn’t last long. In February, economic confidence began to fall. At first, it looked like a blip typical for weekly indices. But the trend south continued month after month. And for last week, which Gallup released today, the index dropped another 3 points to -17, the worst level since September last year. ................(more)

http://wolfstreet.com/2015/09/01/market-rout-hammers-economic-confidence-of-americans/