Consumers have become more pessimistic about the current and future conditions of the economy. Consumer confidence has now dropped to the lowest level since March 2009. The current levels of consumer confidence are now what they were back in the 2008-2009 recession.
Oct. 25, 2011, 10:31 a.m. EDT
By Ruth Mantell
WASHINGTON (MarketWatch) — Consumers became more pessimistic about both current and future conditions in October, as consumer confidence dropped to the lowest level since March 2009, the Conference Board reported Tuesday.
The nonprofit organization said its consumer-confidence index declined to 39.8 in October from a September level of 46.4, which was upwardly revised from a prior estimate of 45.4.
Economists polled by MarketWatch expected a reading of 46 for October; when the economy is growing at a good clip, confidence readings are at 90 and above.
“Consumer confidence is now back to levels last seen during the 2008-2009 recession,” said Lynn Franco, director of the Conference Board’s consumer research center, in a statement.
“Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased. Consumers’ assessment of present-day conditions did not fare any better.”
The Conference Board’s expectations barometer fell to 48.7 in October from 55.1 in September. The percentage of those who expected business conditions to be “better” in six months declined, while most expected the same conditions. Also, more expected income to decrease, while most expect the same.
Meanwhile, the present-situation index fell to 26.3 in October from 33.3 in September.
Those saying business conditions are “bad” rose to 43.7% from 40.5%, while the rest said conditions are either “normal” or “good.” Those saying jobs are “not so plentiful” rose to 49.5% from 45%. Those saying jobs are “hard to get” declined to 47.1% from 49.4%, and those saying jobs are “plentiful” fell to 3.4% from 5.6%.
Consumer spending is the largest portion of the economy, and economists watch confidence readings to get a feel for the direction of spending. Still, analysts have noted a recent breakdown in the relationship between sentiment and spending.
According to the Conference Board, those with plans to buy a home within six months fell to 3.9% in October from 4.7% in September. Meanwhile, those with plans to buy an automobile ticked lower to 11% from 11.1%. Those planning to buy major appliances rose to 45.9% from 40.8%.
Inflation expectations for 12 months remained at 5.8%.
Separately, U.S. home prices edged up in August for a fifth straight month, while a measure of Richmond-area manufacturing remained negative in October.
To see original article CLICK HERE