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.
Confidence was mixed across both portions of the Conference Board index. Present Conditions, measuring how consumers perceive the current state of the economy, dropped sharply to 88.5 from 93.1 in August. This drop puts the present conditions portion of the index at its lowest level since 1994.
The Expectations portion of the index, another factor in the total composite index, rose slightly to 96.5 in September. This index is a measure of future economic activity.
The University of Michigan's Consumer Sentiment Index, a comparable index, also decreased in September to 86.1 from 87.6 in August. Both component indices fell. The Present Conditions portion fell 2.7 points in September to 95.7. The Expectations Index was down slightly to 79.9 from 80.6 in August.
Although both consumer confidence indices have dropped for four consecutive months, the rate of decline in the last two months has been slowing which may indicate some stabilization of consumer confidence. Consumer spending has been strong in home and vehicle sales due to low interest rates and incentives. There is concern, however, that spending will weaken as consumers have little pent up demand and mounting debt. 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.
Sources: www.cnnfn.com
www.conference-board.com
www.economy.com
