Consumer confidence index dropped even more than analysts expected and is the lowest it has been in two years. It dropped 18.9 points in September for a reading of 86.6, down from 105.5. Economists were expecting a reading of 98. The drop was the largest fall from month to month in 15 years.
Investors began selling, but Greenspan calmed investors by emphasizing "the incredible resilience of the U.S. economy in terms of flexibility". Greenspan stated that before policy-makers respond to disasters, markets react through prices, interest rates and exchange rates, which work together to cushion the economy.
I am pleasantly surprised that Greenspan's words insoired so much confidence considering the huge fall in consumer confidence and the importance of domestic spending to the US economy. I'm not conviced that the confidence Greenspan inspired today will keep markets from declining in the next several days, however. We shall see...
Posted by James Trotta at September 28, 2005 11:52 AMI think it's inevitable that 3Q2005 earnings are going to disappoint a lot of investors.
On the plus side, M2 growth has virtually hit a wall. There shouldn't be any need to hike rates again any time soon.
Posted by: Don Martin at October 5, 2005 12:17 AM