Consumer Confidence plummeted in October. The Conference Board's Consumer Confidence Index was 79.4, down 14.3 points from the revised 93.7 in September. The Index dropped for the fifth consecutive month and was at the lowest reading since November 1993. Economists expected a smaller dip to 90.0. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence fell sharply across both portions of the Conference Board index. Present Conditions, measuring how consumers perceive the current state of the economy, dropped to 77.5 from 88.5 in September.
The Expectations portion of the index, another factor in the total composite index, took an even greater hit, falling 16.5 points in October to 80.7. This index is a measure of future economic activity.
The University of Michigan's Consumer Sentiment Index, a comparable index, also decreased in October to 80.6 from 86.1 in September. Both component indices fell. The Present Conditions portion was down 3.4 points in October to 92.4. The Expectations Index fell to 73.1 from 79.9 in September. This Index is at its lowest level in nine years.
October's sizable drop in consumer confidence raises concern for the strength of consumer spending, particularly as we move toward the important holiday shopping season. Rising debt, declines in wealth and little pent-up demand leave the future of consumer spending uncertain. However, income and wage growth has improved over the past several months, while both unemployment and interest rates remain low. Further, timing of the surveys may have judged consumer mood in early October, prior to the recent gains in the stock market.
Overall, the outlook for consumer spending remains uncertain. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is closely watched as a critical component for economic recovery.
Consumer Confidence dropped in September for the fourth consecutive month. The Conference Board's Consumer Confidence Index was 93.3, down 1.2 points from the revised 94.5 in August. The Index is at the lowest reading since November 2001, but was above economist's expectations of 92.0. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Sources: www.cnnfn.com
www.conference-board.com
www.economy.com
