As Obama Sells His Jobs Plan, More Bad Economic News

Retail Sales Growth Stalled in August and Consumer Confidence Drops

by Michael Reubelt on September 14, 2011

Continued squabbling in Congress over spending in Congress has caused August growth in retail sales to remain level. Without any growth, unemployment and fears of a new recession seem like the only things still on the rise. The statistic also caused the retail growth figures for June and July to be revised downward. While Barack Obama travels the country on a campaign to drum up support for his jobs plan, foreboding economic reports continue to appear.

Another piece of portentous news, the Consumer Confidence Index, which had improved slightly in July, fell drastically in August. According to Lynn Franco, the director of The Conference Board Research Center, which releases the monthly index figures, “Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook. The index is now at its lowest level in more than two years.”

Both of these statistics have been attributed in some part to the debt ceiling debates and the public dissatisfaction and dread over the results in both parties. Says Franco, “A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade.”

The consumer reacted to the debt ceiling, the downgrade and the equity market swoon by basically hunkering down and not spending,” said Tom Porcelli, senior U.S. economist at New York-based RBC Capital Markets.

Unfortunately, not spending money may not necessarily translate to actually saving any. In states like California, where unemployment has been markedly higher than the national average, statistics have also shown a drop in the median household income. In California, that year over year income dropped by 4.6 percent, the largest single fall since the statistic was first measured.

Recent statistics from the Census Bureau have also shown that more Americans live below the poverty line, $22,113 of annual income for a family of four, than ever before: 16.3 percent of America, or 46.2 million people.

A large percent of people below the poverty line are children. In 2008 15.45 million children lived in poverty. “Childhood poverty is a consistent risk factor for becoming a violent criminal or a victim of crime,” said Miriam Rollin, the national director of law enforcement group Fight Crime: Invest in Kids.

One piece of good news, though, may be the renewed funding and infrastructure renovating that Obama’s jobs plan will include for the school system. While it may not directly affect the income level of poor children, a better education may help their lifelong chances. In any case, the silver lining of the current economic storm is hard to find.

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