Despite the fact that more and more business execs and watchdogs seem to be seeing signs of an economic recovery, the much-watched Conference Board assessment of consumer confidence has gone into a swoon. It declined in September, and is down again in October.
The base confidence number for September was 53.7 – dropping all the way down to 47.7 for October. A score of 100 represents consumer confidence as it stood in 1985.
The present situation index stands at 20.7, down from 23.0 last month; the future expectation index stands at 65.7, compared to 73.7 last month.
Only 16.3% believe the job market will improve in the months just ahead, down from 18% in September.
The Conference Board’s Lynn Franco said, “Consumers’ assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment. In fact, the Present Situation Index is now at its lowest reading in 26. The short-term outlook has also grown more negative, as a greater proportion of consumers anticipate business and labor market conditions will worsen in the months ahead. Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays.”
RBR-TVBR observation: Consumers were credited with keeping the economy afloat through earlier bubble bursts, but this last one hit them where they live thrice – in their refinanced mortgage, in a shaky employment environment, and in their lack of ability to borrow their way out of trouble. When people start hiring again, consumers may well unleash a pent up desire to spend that may blow away all existing records.