The Conference Board Consumer Confidence Index, which had increased moderately in November, declined to a new all-time low in December. The Index now stands at 38 (1985=100), down from 44.7 in November.
The Present Situation Index plummeted to 29.4 from 42.3 last month. The Expectations Index decreased to 43.8 from 46.2 in November.
“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, but is not as low as levels reached during the 1981-82 recession. Declines in the Expectations Index appear to be moderating, but this index continues to hover at historical lows. Both sub-indexes 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.”
Consumers’ appraisal of current conditions grew substantially worse in December. Those claiming business conditions are “bad” increased to 46 percent from 40.6 percent, while those claiming business conditions are “good” declined to 7.7 percent from 10.1 percent last month. Consumers’ assessment of the labor market was also considerably more negative than a month ago. Those saying jobs are “hard to get” rose to 42 percent from 37.1 percent in November, while those claiming jobs are “plentiful” decreased to 6.2 percent from 8.7 percent.
Consumers’ short-term outlook was only moderately more pessimistic. Those anticipating business conditions to worsen over the next six months increased to 32.8 percent from 28.3 percent, while those expecting conditions to improve rose to 13.4 percent from 11.5 percent. The outlook for the labor market was also somewhat mixed. The percent of consumers anticipating fewer jobs in the months ahead increased to 41.0 percent from 33.7 percent, while those expecting more jobs increased to 9.7 percent from 9.2 percent. The proportion of consumers anticipating an increase in their incomes decreased to 12.7 percent from 13.1 percent.
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 research company TNS. The cutoff date for December’s preliminary results was Dec. 22.