Confidence in Australian economy ebbs again. The Westpac-Melbourne Institute Index of Consumer Sentiment fell by 3.5% in August from 92.8 in July to 89.6 in August. When releasing the figures, Wespac’s chief economist Bill Evans said that coming after a fall of 8.3% in July this latest fall is sending a significant message. The Index is at its lowest level since May 2009.

There were a number of prints in the 85 – 90 range for the Index during that 2008/2009 period. However, you need to look back to the recession of the early 1990’s to see any previous sustained prints for the Index in the sub 90 range.

The Survey was conducted over the period August 1 to 6 and covered 1200 respondents. Some 76% of respondents answered the survey before Friday August 5 when confidence would have been severely jolted by turmoil in global financial markets with the reported 4.3% fall in the Dow Jones Index of US shares and the 4.2% fall in the Australian Index. For the period before August 5 the Index printed 91.4 and for the period of August 5 to 6 the Index printed 83.9.

Those findings are sure to encourage the Reserve Bank to at least keep official interest rates on hold and will give encouragement to those betting that the next move in rates will be down. On the Crikey Interest Rate Indicator those forecasting a cut now out number those predicting no change.

Polls aplenty. It’s really just a glorified fund raising function for the Iowa State Republican Party but the Ames Straw Poll that takes place in Ames, Iowa after a barbecue on Saturday is treated by a media hungry for the presidential race to get seriously underway as something like a barrier trial.

Those who attend get to listen to most of the Republican aspirants for nomination then fill in a ballot paper and dip their thumb into indelible ink to ensure, says Wikipedia, that they don’t vote early and often as apparently has happened in the past.

Michele Bachmann is the Ames poll favourite this time at a 59% probability from Ron Paul at 30% and Tim Pawlenty at 12%.  The presumed leader in the nomination contest America-wide, George Romney, is not appearing this year and Sarah Palin is also a scratching.

Obama’s chances seen as fading. As to the main event in November next year, without knowing who is in the race it is hard for the pollsters to provide real guidance. I notice from the Real Clear Politics site that in a contest between Barack Obama and a generic Republican that the predicted vote is Republican 43.4% to Obama 42.8%.

But when they question is asked comparing Obama with named Republicans like Romney, Bachmann or Palin the result swings very much in the incumbent’s favour. That’s no help at all really so I’ll stick with the market which shows the Democrats with the slightest of edges.

If you happen to believe in the “it’s the economy, stupid” category of predictors there’s an interesting summary of the latest views of political scientists as determined by their models on Ezra Klein’s Washington Post blog.

In summary the economy needs to pick up if Obama is to win.