There were two pieces of significant economy-related news today. The first was that the Conference Board's index of leading economic indicators increased for the fifth straight month, this time by 0.3 percent, while May's increase was revised up to 0.7 percent. The second was that the University of Michigan's preliminary June reading on consumer confidence came in at 81.3, a decline from May. Both results trailed expectations.
Predictably, the Associated Press's Martin Crutsinger put a smiley face on the news, believing it shows that "that economic growth should accelerate in the second half of this year," while Bloomberg News's Nina Glinski was more sanguine, interpreting the confidence report as an indication that "Americans’ outlook for the economy dimmed." Excerpts from both efforts follow the jump.
First, from the AP's Crutsinger (also saved here; bolds are mine throughout this post):
GAUGE OF US ECONOMY RISES 0.3 PERCENT IN JUNE
A gauge designed to predict the economy's future health increased in June for a fifth consecutive month, supporting the view that economic growth should accelerate in the second half of this year.
The Conference Board said Friday its index of leading indicators rose 0.3 percent last month. That was slightly lower than forecast but the May increase was revised up to a 0.7 percent gain, a bit stronger than first estimated.
The economy shrank sharply in the first three months of the year, reflecting the effects of a harsh winter, but economists say a rebound began in the April-June quarter and will strengthen in the second half of this year.
Conference Board economist Ken Goldstein said that stronger consumer demand driven by sustained job gains remained "the main source of improvement for the U.S. economy."
... A second report Friday showed that the University of Michigan's measure of consumer confidence dipped slightly in July to a preliminary reading of 81.3, down from 82.5 in June.
Paul Diggle, U.S. economist at Capital Economics, attributed the small decline to higher gasoline prices which he said offset the strong gains recorded in the stock market and solid growth in employment.
Crutsinger is still flogging the weather excuse for the first quarter's contraction, even though no less than the CEO of Wal-Mart recently said that its problems with sales volume have far more to do with the fact that consumers, even as many of them are getting jobs, don't have money to spend than it does with bad weather. The Container Store's CEO also agrees with that. Meanwhile, Family Dollar, at one of the stores occupying the demographic rung below Wal-Mart, announced the closing of 370 stores in April.
The AP reporter clearly believes, or at least wants readers to believe, that the consumer sentiment report was virtually meaningless.
Not so Bloomberg's Glinski:
Consumer Sentiment in U.S. Declines to Lowest in Four Months
Consumer confidence in the U.S. unexpectedly declined in July to a four-month low as Americans’ outlook for the economy dimmed.
The Thomson Reuters/University of Michigan preliminary index of sentiment dropped to 81.3 this month from 82.5 in June. The median projection in a Bloomberg survey of 68 economists called for a July reading of 83.
Higher prices at grocery-store checkout lines are souring attitudes and straining household budgets as they take a bigger bite out of workers’ paychecks. Absent a pickup in wage growth, a higher cost of living raises the risk that consumer spending, which accounts for almost 70 percent of the economy, will cool.
“Consumers are having a little bit of trouble seeing further improvement later down the road,” said Gennadiy Goldberg, a U.S. strategist at TD Securities USA LLC in New York. “If you started to have wages pick up, you would probably have more improvement in buying expectations for things like homes and autos and durable goods.”
Another report showed the Conference Board’s index of leading economic indicators climbed 0.3 percent in June after a 0.7 percent May increase that was stronger than initially estimated.
To be a little fair to Crutsinger, Bloomberg's separate report on leading indicators, filed by Jeanna Smialek a half-hour before Glinski's sentiment coverage, said that it shows that "the economy continues to gain momentum following a slowdown at the start of 2014."
That said, it should be clear to anyone but someone from the Administration's Press that the sentiment report killed whatever positivity was present in the leading indicators. Thanks to Crustsinger, that's clearly not what Americans will mostly hear tonight and over the weekend at AP-subscribing print and broadcast outlets. The AP really is the Obama administration's best friend.
Cross-posted at BizzyBlog.com.
