The Conference Board Consumer Confidence Index, which had improved moderately in September, fell to an all-time low in October. The Index now stands at 38, down from 61.4 in September. Consumer Confidence Surveys are based on a representative sample of 5,000 U.S. households. The cutoff date for October's preliminary results was October 21.
"The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence,” said Lynn Franco, director of The Conference Board Consumer Research Center. "The decline in the Index (-23.4 points) is the third largest in the history of the series, and the lowest reading on record. In assessing current conditions, consumers rated the labor market and business conditions much less favorably, suggesting that the fourth quarter is off to a weaker start than the third quarter. Looking ahead, consumers are extremely pessimistic, and a significantly larger proportion than last month foresees business and labor market conditions worsening. Their earnings outlook, as well as inflation outlook, is also more pessimistic, and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season.”
Consumers' appraisal of current conditions deteriorated sharply in October. Those saying business conditions are "bad" increased to 38.3 percent from 33.4 percent, while those claiming business conditions are "good" declined to 9.2 percent from 12.8 percent. Consumer assessment of the labor market was also much more negative. The percentage of consumers saying jobs are "hard to get" rose to 37.2 percent from 32.2 percent in September, while those claiming jobs are "plentiful" decreased to 8.9 percent from 12.6 percent.
Consumers' short-term outlook turned significantly more pessimistic. Those expecting business conditions to worsen over the next six months surged to 36.6 percent from 21 percent, while those anticipating conditions to improve fell to 9.9 percent from 13.4 percent. The outlook for the job market was also less favorable. The percent of consumers expecting fewer jobs in the months ahead surged to 41.5 percent from 26.9 percent, while those anticipating more jobs decreased to 7.4 percent from 11.9 percent. The proportion of consumers expecting their incomes to increase fell to 10.8 percent from 15.1 percent.
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