NEW YORK – U.S. consumer confidence this month plunged to an all-time low, ending three months of gradual improvement, according to preliminary October figures released today by The Conference Board.
The board’s Consumer Confidence Index fell to a new low of 38 points (1985 = 100) – a decline of 23.4 points, or 38.1 percent, from September’s final reading of 61.4 – ending a three-month recovery from a June reading that was the lowest in 16 years. (READ MORE)
Respondents’ hopes for the future dimmed amid the global financial crisis, Wall Street turmoil, declining home and investment equity and nine straight months of U.S. job losses. The lowest reading among the survey’s nine regions was in New England, where the CCI fell to 22.2 points from September’s 42.8.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
Analysts had expected the nationwide index would fall to 52 points, from the original September estimate of 59.8, based on the median forecast from aBloomberg News survey of 66 economists. The actual CCI was lower than the most pessimistic of their October estimates, which ranged from 45 to 56.6 points.
Its 23.4-point month-over-month decline was third-sharpest on record, exceeded only by two plunges during the oil crisis of the early 1970s, the report noted. “The economy feels like it is contracting at a rapid pace,” Lewis Alexander, chief economist at Citigroup Global Markets Inc. in New York, told Bloomberg Television. “It’s clear that consumers have really been affected by the volatility we’ve seen in the last six weeks.”
“The impact of the financial crisis over the last several weeks has clearly taken a toll,” Lynn Franco, director of the board’s Consumer Research Center, said in a statement today.
“In assessing current conditions, consumers rated the labor market and business conditions much less favorably, suggesting that the fourth quarter is off to a weaker start than the third quarter,” she added.
“Looking ahead, consumers are extremely pessimistic, and a significantly larger proportion than last month foresees business and labor-market conditions worsening. Their earnings outlook, as well as inflation outlook, is also more pessimistic, and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season.”
The Present Situation Index – reflecting consumers’ views of current conditions – fell to 41.9 points from last month’s 61.1.
The share of respondents seeing business conditions as bad rose to 38.3 percent in October from 33.4 percent the month before, while the share saying business conditions are good fell to 9.2 percent from last month’s 12.8 percent. The share seeing jobs as hard to get rose to 37.2 percent from September’s 32.2 percent, while the share seeing jobs as plentiful fell to 8.9 percent from the previous 12.6 percent.
The Expectations Index – a gauge of consumer hopes and fears for the economy over the next six months – also fell, plunging to 35.5 points from September’s 61.5. Only 10.8 percent of respondents said they expect their incomes to rise, down from 15.1 percent the month before. An improvement in business conditions was expected by 9.9 percent, down from September’s 13.4 percent, while a worsening over the next half-year was anticipated by 36.6 percent, up from 21.0 percent the month before.
In addition, fewer people than in September said they planned to purchase a car or major appliance in the next six months, although more said they were contemplating buying a home.
The report raised fresh fears about consumer spending on the threshold of the holiday spending season that accounts for the lion’s share of many retailers’ and manufacturers’ annual sales. “It doesn’t get much worse than this,” Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Bloomberg News. “There’s a risk of a deeper, longer-lasting recession.”
The indexes are based on a monthly survey conducted for The Conference Board by custom research firm TNS. The cutoff date for this month’s preliminary results was Oct. 21.
“We are experiencing a series of events unprecedented in the history of the global financial markets,” Conference Board CEO Jon Spector and President Gail Foster wrote last month in launching “Working Through the Crisis,” a series of free webcasts. Tomorrow from 11 to 11:30 a.m., the board’s Chief Economist Bart van Ark will join research center director De Franco in discussing the report, in a webcast entitled “What is Happening to Consumer Confidence.” For information or to register, visit the group’s Web site, below.
The Conference Board is a nonpartisan, nonprofit business membership and research organization with offices in New York City, Chicago and abroad. Additional information is available at www.Conference-Board.org.
