Rainy Day Economics

Two big pieces of data out today, Consumer Confidence and the FOMC minutes. Consumer confidence came in under consensus estimates earlier this morning, FOMC minutes to be released at two:

Consumer Confidence Plunges in August

Worries about the job market caused consumers' confidence in the U.S. economy to tumble more than expected in August to its lowest level in nine months
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The Conference Board, a New York-based research group, said Tuesday its confidence index fell to a reading of 99.6, down from 107.0 in July. The index was lower than analysts' expectation of 102.5.

The last time the index fell below 100 was in November, which saw a reading of 98.3.

Lynn Franco, director of the Conference Board's consumer research center, said this month's drop -- the largest one-month decline since Hurricane Katrina ravaged the Gulf Coast a year ago -- means expectations of slower growth in the coming months.

"You've got a deterioration in business conditions coupled with lackluster job growth," Franco said.

Americans' sentiment about the labor market worsened in August, with consumers saying jobs are "plentiful" decreasing to 24.4 percent in August from 28.6 percent in July, and those saying jobs are "hard to get" increasing to 21.1 percent from 19.6 percent.

For those interested in reading the FOMC minutes released this afternoon:

Minutes of the Federal Open Market Committee

From Bloomberg:

Fed Members Saw Pause as `Close Call'; Unsure of Further Moves

Federal Reserve officials saw their decision to suspend a two-year run of interest-rate increases as a ``close call'' and were unsure whether they would further raise borrowing costs, records of their last meeting showed.

``Many members thought that the decision to keep policy unchanged at this meeting was a close call and noted that additional firming could well be needed,'' the Fed said in minutes of the Aug. 8 meeting, released in Washington today. ``Members generally saw limited risk in deferring further policy tightening that might prove necessary.''

The records detail how central bankers wrestled with a dilemma: raise rates because of higher inflation fueled by an increase in energy costs, or hold back because of a housing slump that's weakening the economy's expansion. Most voting Fed members felt that the current rate stance may prove ``consistent with satisfactory economic performance.''

The 9-1 decision, which left the benchmark lending rate at 5.25 percent, was the first of Chairman Ben S. Bernanke's tenure to feature an opposing vote.

The dissenter, Richmond Fed President Jeffrey Lacker, wanted an 18th quarter-point increase because economic growth was not likely to slow enough to reduce inflation. In his view, ``further tightening was needed to bring inflation down more rapidly than would be the case if the policy rate were kept unchanged,'' the minutes said.

Caveat Emptor!
Grim