Consumer Confidence Rises in September, Advisor Confidence Falls

Public confidence hits seven month high, advisors worry over market uncertainty

Consumer/Advisor Confidence chartConflicting sentiment over the relative strength of the economy has pundits scratching their heads. While a monthly survey of advisors is down for the month of September, consumer confidence jumped to its highest level in seven months.

The Advisor Confidence Index, a benchmark that gauges advisor views on the U.S. economy and stock market, reports that advisor confidence fell in September, with the index slipping 1.76% from the August level to close at 94.79.

Three of the four components of the index, produced by AdvisorBenchmarking, a Guggenheim Investments affiliate, experienced a decrease over the prior month. The only component to rise was the “12-month economic outlook,” suggesting an expectation of short-term volatility. The “Current Economic Outlook,” “Six-Month Economic Outlook” and “Stock Market Economic Outlook” all fell.

However, consumers’ appraisal of present-day conditions improved in September. The Conference Board found those claiming business conditions are “good” edged up to 15.5% from 15.3%, while those saying business conditions are “bad” declined to 33.3% from 34.3%.

Consumers’ assessment of the labor market was also more upbeat. Those stating jobs are “plentiful” rose to 8.3% from 7.2%, while those claiming jobs are “hard to get” edged down to 39.9% from 40.6%.

And even though advisor confidence slipped in September, advisors were mixed in their comments, adding to the confusion.

“What the markets see is that the economy, particularly the corporate bottom-line, is looking pretty good and moving in the right direction and, as in all recessions before, the markets recover quicker than the economy,” said George Cheatham of American Financial Consultants Inc. “The biggest anchor holding back the economy is the uncertainty created by government officials both here and in Europe.”

Yet Paul Bennett of c5 Wealth Management took specific aim at the policies of the Fed.

“QE3 will likely ultimately lead to too much money chasing too few goods (i.e., inflation),”Bennett said. “It appears that inflation is no longer a question of ‘if’, but ‘when.’ ”

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