Beyond confidence indicator lies clearer view of economy

On its surface, this week’s report from The Conference Board that shows consumer confidence among Americans falling fast reinforces perceptions that the nation’s economy remains stuck in the muck of economic decay.

That widely watched index is an indicator that measures the degree of optimism on the state of the economy that consumers express through their savings and spending. It is based on monthly surveys of 5,000 households.

The June index fell to 52.9 from 62.7 in May. It reversed recent monthly gains and sent the Dow Jones Industrials tumbling hundreds of points.

“Increasing uncertainty and apprehension about the future state of the economy and labor market are the primary reasons for the sharp reversal in confidence,’’ said Lynn Franco, director of the Conference Board.

Though few could deny that the American economy remains sickly, one report taken in isolation should not trigger undue alarmism. Nor should it blind us to the perspective that economic conditions in our nation and in the Mahoning Valley have been making slow but steady baby steps toward regaining a solid footing.

Start with the Consumer Confidence index itself. Despite June’s dismal report, the CCI generally has been creeping upward over the past year, and the bleak June results are still twice as high as the 25.3 index recorded during the depths of the recession in February 2009.

Then analyze trends in joblessness in the nation and our region. The number of new unemployment claims have fallen by about 100,000 weekly between June 2009 and June 2010.And although some forecasters predict a slight uptick in June unemployment data to be released Friday, the national rate also has generally moved downward ever so slowly, falling in May to 9.7 percent.

Encouraging local signs

In the Mahoning Valley, that trend has been markedly more positive. The Valley’s unemployment rate reached its lowest level since 2008 in May, the Ohio Department of Job and Family Services reported recently.

In Trumbull County alone, joblessness fell from 13.5 percent in May 2009 to 11.5 percent this May. That’s still unacceptably high, but at least it illustrates a clear rebound in job opportunities.

Another barometer of economic vitality — home sales — also trends positively. In Northeast Ohio, sales of new and existing single-family homes have increased 3.6 percent so far this year, while condo sales jumped 5.9 percent, according to data for 15 counties covered by the Northeast Ohio Real Estate Exchange listing system.

Despite these and other optimistic signs of an economy on a slow mend — full three-shift employment at GM Lordstown, hundreds of new jobs in line at V&M Star and a host of smaller jobs-creating ventures locally and throughout the nation — Americans cannot delude themselves into thinking full recovery is just around the corner. Economists remind us constantly that sustained economic growth will be months if not years away, and there will be intermittent peaks and valleys along the way.

So even though the Consumer Confidence Index and the stock market sunk to new 2010 lows this week, we need not panic. We have hit one of those lows.

We all must keep those indices in perspective, and policy makers must use those pessimistic indicators as motivators to produce long-term economic vitality.