The Consumer Confidence Index
By Mark Alexander · Friday, August 2, 2002
On Monday, the 60% of Americans who now depend on corporate securities as part of their net worth and retirement, cheered the Dow as it added a 447 point gain to similar substantial gains in the market last week. Though softening by 230 points on Thursday, the trend upward may finally signal that the recent disparity between the financial markets and the national economy is coming to an end. On the other hand, despite the rebounds, the Consumer Confidence Index dropped to its lowest level since congressional hearings on the Enron scandal in February. Consumer spending, a reflection of consumer confidence, accounts for two-thirds of the nation's economy -- consumer confidence undergirds economic recovery.
Last week investor confidence was stirred by news of an agreement in Congress to confront fraudulent corporate accounting practices; that confidence was bolstered again on Tuesday when President Bush signed the bill into law. Additional evidence of the administration's commitment to corporate accountability -- former WorldCom CFO Scott Sullivan and former Controller David Myers were arrested on charges of securities fraud, conspiracy to commit securities fraud and making false filings to the SEC. If convicted, the two men face considerable fines and prison sentences.