Confidence Plunges to Record Low

December 30, 2008  by in UnCategorized   

By Home Furnishings Business in economic news on December 31, 2008 Consumer confidence ended the year on a sour note, according to the Conference Board's latest Consumer Confidence Index results. The Index fell to 38 in December, down from 44.7 in November (1985=100), declining to an all-time low.

The Present Situation Index plummeted to 29.4 from 42.3 in November and the Expectations Index slipped to 43.8 from 46.2 last month.

Consumer confidence was identified as the No. 1 measure of how the economy is performing by respondents in Home Furnishings Business' last two exclusive economic surveys.

Just more than half of consumers—54 percent—rated current business conditions as "good" or "normal," down from 59.4 percent in November. Only 6.2 percent of those surveyed said jobs were "plentiful," compared with 8.7 percent last month. The balance of respondents in both months said jobs were either "not so plentiful" or "hard to get."

Looking ahead six months, 67.2 percent of consumers said they expected business conditions to be the same or better, measured against 71.7 in November. In December, nearly 60 percent said more or the same number of jobs would be available, compared with 66.3 percent the prior month.

Despite the overall dismal confidence results, consumer purchasing plans for big-ticket items in the next six months strengthened. In December, 4.7 percent of consumers planned to buy an automobile in the next six months, compared with 3.8 percent last month and 2.5 percent indicated they expected to purchase a home, up from 2.1 percent in November.

Regional confidence results paralleled national figures, with declines recorded in eight of the nine areas. The lone holdout was the West South Central region, which posted an identical confidence score of 65 in both November and December.

"The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008," said Lynn Franco, director of the Conference Board Consumer Research Center.

"The Present Situation Index is now close to levels last seen in the months following the 1990–91 recession," said Franco, "but is not as low as levels reached during the 1980–81 recession. Declines in the Expectations Index appear to be moderating, but this index continues to hover at historical lows."

She said both the present situation and expectations measurements bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom.

"In the meantime, however, the overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half," Franco said.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The cutoff date for December's preliminary results was Dec. 22.