The Conference Board’s Consumer Confidence Index, which has declined for four consecutive months, deteriorated even further in October. The Index now stands at 79.4 (1985=100), down from 93.7 in September.
The Present Situation Index fell to 77.5 from 88.5, and the Expectations Index declined to 80.7 from 97.2. Consumer Confidence is now at its lowest level since November 1993, when it stood at 71.9.
“A weak labor market, the threat of military action in Iraq, and a prolonged decline in the financial markets have clearly dampened both consumers’ confidence and their expectations for the near future,” says Lynn Franco, Director of The Conference Board’s Consumer Research Center. “The outlook for the holiday retail season is now fairly bleak. Without the likelihood of a pickup in consumer spending, an already weak economic recovery could weaken further.”
Consumers’ assessment of the present situation turned notably more negative. Those rating current business conditions as “bad” increased to 27.6% from 23.8%. Those rating current conditions as “good” decreased to 15.6% from 18.5%. Consumers reporting jobs are hard to get rose to 27.3% from 25.4% last month. Those claiming jobs are plentiful declined to 14.8% from 15.9% in September.
Consumers’ expectations for the next six months fell in October. The percent of respondents expecting a deterioration in business conditions in the next six months rose to 14.1% from 9.7%. Consumers expecting conditions to improve declined to 19% from 21.6%.
The employment outlook was also less favorable in October. Consumers anticipating more jobs to become available dropped to 15% from 17.3%, while those expecting fewer jobs in the coming months rose to 22.1% from 16.8%. Income expectations were also more pessimistic. Now, only 17.8% of consumers anticipate a rise in their incomes, down from 21.5% in September.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by NFO WorldGroup, a member of The Interpublic Group of Companies.