Put Little Stock in Consumer-Confidence Drop

Stock quotes in this article: BBY , WMT , RSH  

NEW YORK (TheStreet) -- Consumer confidence unexpectedly fell in September, taking some wind out of the stock-market rally. Fear not, investors.

We've all been on edge, waiting for truly bullish signals about the economy to justify a more than a 50% increase in the benchmark S&P 500 Index since March's 12-year low. The S&P/Case-Shiller home-price index, also released today, showed home values in 20 U.S. metropolitan areas jumped in July. Consumer confidence had decreased in July.

Still, it was the smallest decline in Americans' confidence since January. And the reading of 53.1, a drop of 1.4, is still higher than it was in June and July 2008, when bubbles of all types hit a zenith and oil prices touched a record high.

Economists were predicting an increase of 2.9 in September after a gain of 6.7 in August broke a two-month decline. However, the confidence statistic is a fickle reading that economists rarely predict with accuracy. How could they? Surveys are used to gauge confidence, leaving the measure open to human emotions and a slew of external factors that can lead to slight up or down oscillations. September's decrease is too mild to signal a change in trend.

Considering the saturation of media coverage rehashing the terrifying events of the past year due to the one-year anniversary of Lehman's collapse, it's actually impressive that confidence didn't dip even more. During the giddy stock-market rally of the late spring and summer, it was easy to ignore the near collapse of the economic system just half a year earlier, but now that the wound has been poked and reexamined, lower confidence is justified.

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