Consumer confidence tumbles in October on job concerns
Filed under: Economy
Despite impressive gains in U.S. stock markets, consumers continue to exhibit a wait-and-see stance toward the country's economy. Consumer confidence unexpectedly plunged in October to 47.7 from 53.4 in September, The Conference Board announced Tuesday, led by citizens' concern about jobs.A Bloomberg News survey of economists had expected the index to rise to 54.0 in October from a revised 53.4 in September. It totaled 54.5 in August, 47.4 in July, and 44.8 in June. The index hit a record low of 25.3 in February. (Base year, 1985=100.)
Also, the present-situation index declined to 20.7 in October from 23.0 in September, and is now at its lowest level in 26 years.
Lynn Franco, director of The Conference Board's Consumer Research Center, said labor market conditions played a large role in the October's index drop. "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," Franco said in a statement. "Consumers also remain quite pessimistic about their future earnings, a sentiment that will likely constrain spending during the holidays."
In October, those saying jobs are "hard to get" increased to 49.6 percent from 47.0 percent in September, while those claiming jobs are "plentiful" decreased to 3.4 percent from 3.6 percent.
Further, consumers' assessment of current conditions worsened in October. Those claiming business conditions are "bad" increased to 47.1 percent from 46.3 percent in September, while those claiming business conditions are "good" decreased to 7.7 percent from 8.6 percent.
In addition, the board said consumers' short-term expectations were more pessimistic as well. Consumers expecting business conditions to improve over the next six months decreased to 20.8 percent in October from 21.3 percent in September, while those expecting conditions to worsen increased to 18.3 percent from 14.6 percent.
Investors should pay attention to the Consumer Confidence Index because, historically, consumer spending has accounted for about 60 percent to 65 percent of U.S. GDP. Moreover, rises in consumer confidence are directly correlated with increases in consumer spending. Hence, if confidence rises, and a trend forms, that most likely means good things are ahead for corporate revenue and earnings.
The Consumer Confidence Index is based on a representative sample of 5,000 households.
Economic Analysis: The October reading is a definite disappointment. Clearly, consumers are still concerned about the high U.S. unemployment rate and the overall job market. However, one would expect consumer confidence to resume its upward trek in the months ahead, if job losses continue to subside and net monthly job gains resume. In a nutshell, stock market gains and signs of stabilization in the housing sector aren't enough to sustain consumer confidence: Americans will need to see tangible signs of sustained job gains, with rising, real incomes, to get consumer confidence headed in the right direction.
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Reader Comments (Page 1 of 4)
10-27-2009 @ 12:05PM
Will said...
Businesses must mimimize both the number of employees and shed people that have an anti business political profile. Business owners and managers realized that Blacks and Staunch Liberal Obama supporters are dangerous in that blacks fell all non Obama supporters are racists and Liberalis in general want to sieze control of the business throgh unions or government. The increased risk in doing business in America is enough without having what is essentially the enemy under your employment. This reduction of such people will continue for years.
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10-27-2009 @ 12:58PM
RussB said...
You are a hater aren't you???
10-27-2009 @ 2:12PM
Paul Del said...
People who belong to unions do well, the Federal, State, City and local governments all have unions, that is the majority of employees in the work place, lets see why big business is corrupt, the CEO's get millions of dollars even if their business fails, who get hurt? the small investor! I do agree that the work force is shrinking, it was going down before Obama took office, that was the reason for the stimulus, it was a good move or depression was on the way, regulations have to be put on Big Business to keep them from gambling with small time investors, look at Medicare!, 60 min exposed the fraud, it is in the billions of dollars, even building weapons for the military, the government is getting ripped off, don't blame Obama, he did not cause this mess, who do you think would do a better job? give me a name?, good luck............................
10-27-2009 @ 5:02PM
RonHalpern said...
Dear Bill:
I'm a liberal Democratic bankruptcy attorney, and business has never been better! The collapse of the banking system, coupled with the foolish risks inspired by greed (during the Bush administration's watch) has insured that I will be busy for years to come.
10-27-2009 @ 12:01PM
Mark said...
Here's a clue. Obama has done NOTHING for small business. What the heck it's just the job engine for the United States. CLEARLY our fearless leader's agenda is to nationalize the big companies, banks, healthcare etc. and to hell with small business.
PS if the same money had been spent on tax incentives to small business the unemployment wouldn't be 10%.
PPS if you want to know what the REAL unemployment rate is (unemployed still looking, unemployed who have given up, part-time employed looking for full time, it's called U6 (google it) it's 16.5%!!)
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10-27-2009 @ 12:05PM
hemipwr54 said...
"Consumer confidence tumbles in October on job concerns" , no duh !
Another brilliant story , and yes consumers are still leery of spending , I think people have actually gotten sick of feeding the Rich and Wasteful all their money , we are not swayed as easily as the morons on Wall Street , who's greed drives their lust for the Recession to end .
Average Americans are sick at the current economy , the spend , spend , spend , got the US in trouble , trouble , trouble , most average people realize that fact and right now are in the save mode , not spend , we have to protect ours not feed theirs .
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10-27-2009 @ 2:11PM
Will said...
Actually, every dollar saved means one less dollar to a business which means less money to pay for labor which means somebody is closer to being layed off, which in turn, causes others to save more, buy less, employe less and then lay off more until finally, the consumers destroy their own jobs "in order to screw the rich" which of course, had moved their cheese far from their reach months before.
10-27-2009 @ 12:18PM
RJ said...
In the last two-three weeks seeing that gasoline price jumping 5-10 cents every other a couple days is restraining my spending habits. If the oil/gas prices keep rising you will not be seeing any consumer confidence or spending on the increase any time soon. Therefore American consumers will be slowing down purchasing items which includes Chinese goods.......
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10-27-2009 @ 12:30PM
Dan said...
I believe the consumers are concerned about socialism. They are not happy with the excesses of corporate America. In a free society there will be abusers who will take advantage of honest people. That is not a good reason to end freedoms. We had regulatory agencies in place while these things were happening. I do not think much of governmental regulators who don’t do their jobs. We are creating more governmental hurdles for honest companies. With the way we are destroying our dollar with over printing maybe we should be spending more now before inflation makes everything much more expensive.
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10-27-2009 @ 12:30PM
sue said...
Obama is ruining all consumer confidence. He wants to get rid of families, the unborn and increase his prestige and wealth. He will continue to pay for unemployment, have women go back to school while we are all in debt and struggling. He is gaining support of big business to increase their wealth. Now he wants us to be a part of his healthcare plan so we can pay for abortions and force us to choose against our morals. it is sickening
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10-27-2009 @ 2:30PM
Paul Del said...
Obama is not destroying American, Bush accomplished that!, before you given an opinion on your views of Healthcare! look at all th options out there, most plans got a large increase going into next year, lets talk about this so called Government run Healthcare system, Social Security was a disability insurance, then became a retirement, it is a government plan, Medcare is a government plan, all Federal, State, County and city government are government plans, Sue! ask about your Senator, Congressman etc. what their plan is?, bet they will avoid the question, your paying for it and mine too, everyone should have options, I get a lot of options every October and so should you
10-27-2009 @ 3:03PM
vaughnvdg said...
Miss SUE we are still suffering from THE DOG DAYS OF DUMBYA BUSH!!! Nobody can turn the MESS HE CREATED around in such a short period of time. HANDLE THE TRUTH!!!!!
10-27-2009 @ 5:27PM
jessie said...
you're right vaugne, this all started when the LIEberals took over congress, almost 3 years ago
10-27-2009 @ 12:31PM
Bob said...
Hmmm I remember the big stimulus to small business to help stimulate the auto industry by the republicans. The owners bought corvettes then pissed away all the money they made. The executives at GM gave the profits to themselves as bonuses. Everyone was layed off because no one kept a reserve for the bad times (NOW). Our GDP should not be based 70% on consumer spending alone. We need to make something and sell it. Do you think for one second that we can only sell Chinese products and just give all our money to them. Stop and look at every product you buy. If is made in China put it back. ASk the manager if they have anything made in the US. This will be a very long road back. This is no joke!
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10-27-2009 @ 2:58PM
Mark said...
uh, the automobile industry isn't "small business".
10-27-2009 @ 12:31PM
David said...
I just love these stories............. Whoever is in charge of gening up the media for this type of trash is talking out of both sides of their mouths............. This Story say,"Consumer confidence tumbles in October on job concerns".......... And then there is another Story that says " Housing Market Has 2% increase in Sept.".... Now, it is really one or the other..............
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10-27-2009 @ 12:35PM
Jim said...
This is just simply amazing. Just this morning there was an article in this very spot that said that consumers were still heavily in debt, but were more comfortable with it. It seems that they not only speak with a forked tongue but also out of both sides of their mouth. Why don't you just show us, the readers, the data and let us figure it out without your ignorant and biased input.
We are not all stupid.
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10-27-2009 @ 12:35PM
David said...
The U.S. Postal Service was established in 1775, you've had 234 years to get it right and it's broke.. Social Security was established in 1935, you've had 74 years to get it right, it's broke. Fannie Mae was established in 1938, you've had 71 years to get it right, it's broke. The War on Poverty started in 1964, you've 45 years to get it right, $1 trillion of our money confiscated each year and transferred to the poor and dishonest, it hasn't worked and our entire country is broke.. Medicare and Medicaid were established in 1965, you've had 44 years to get them right, they're both broke. Freddie Mac was established in 1970, you've had 39 years to get it right, it's broke. Trillions went into the Tarp political payoff game, The Stimulus, the Omnibus Appropriations Act of 2009 and none show any signs of working, although ACORN appears to have found a new source of money, The American Taxpayer. And finally, Cash for Clunkers was established in 2009 and went broke in 2009, it took cars that wee the best some people could afford and replaced them with high-priced and less affordable cars. So with 100% failure rate and a record that proves Government is a failure you want the American People to believe that the Gov. can be trusted with Health Care....ARE YOU CRAZY
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10-27-2009 @ 1:44PM
Linda said...
After that lengthy RANT I'd say you are crazy!
10-27-2009 @ 1:58PM
Linda said...
Why don't you just pack up and move to another country if your so unhappy with the USA?? Negative BREEDS Negative so get the hell outta here!!