Consumer Confidence Plunges to All-Time Low

October 28, 2008  by in UnCategorized   

By Home Furnishings Business in on October 2008 The Conference Board’s Consumer Confidence Index set a record low in October, plummeting to 38 from 61.4 in September (1985=100). The Present Situation Index fell to 41.9 from 61.1 last month, and the Expectations Index declined to 35.5 points in October from September’s 61.5 points.

Consumers’ appraisal of current business conditions was equally dismal, with 38.3 percent saying conditions were “bad,” up from 33.4 in September. Just 9.2 percent of consumers said business conditions were “good,” down from 12.8 percent last month. The balance of consumers said business conditions were “normal.”

More than 91 percent of consumers said jobs were either “not so plentiful” or “hard to get,” up from 87.4 percent a month ago.

Consumers were also gloomy about business conditions in six months, with 36.6 percent expecting conditions would be worse, up from 21 percent in September.

Short-term (six months) buying plans for big-ticket items offered mixed results, with 4.4 percent of consumers planning on buying an automobile, down from 4.9 percent last month and 25.9 percent expecting to purchase a major appliance, measured against 29 percent in September.

The one bright spot was six-month buying plans for homes, with 2.7 percent of October consumers anticipating a purchase, up from 2.3 percent in September.

Regional results were down across the board, with the largest drop posted in the East South Central region, down 36.9 points from September to October.

“The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers’ confidence,” said Lynn Franco, director of the Conference Board Consumer Research Center. “The decline in the Index, 23.4 points, is the third-largest in the history of the series, and the lowest reading on record. ... 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.

“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,” said Franco.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The cutoff date for October’s preliminary results was Oct. 21.