The Conference Board’s Consumer Confidence Index, which had declined in August, plummeted in September. The Index now stands at 97.6 (1985=100), down from 114.0 in August. The Present Situation Index fell from 144.5 to 125.2. The Expectations Index declined from 93.7 to 79.2. The 16.4-point slide in confidence is the largest monthly drop since October 1990, when this Index fell by 23.0 points. 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 (NYSE: IPG).
While survey results conducted before and after the terrorist attacks on September 11 differed slightly, there was no reversal in the downward trend of the Index.
The further erosion in confidence continues to be fueled by deteriorating labor market conditions and weakening business conditions. Consumers rating business conditions as favorable fell from 27.7 percent to 22.0 percent. The percent of consumers claiming jobs were “hard to get” increased from 16.0 percent to 18.5 percent in September.
Expectations for the next six months were even more pessimistic. The percent of consumers anticipating business conditions to worsen increased from 10.7 percent to 15.0 percent. Those expecting fewer jobs increased from 17.7 percent to 21.9 percent. Consumer income prospects were also less optimistic. Today, only 21.1 percent expect an increase in their families’ income, down from 23.2 percent in August.
CAN CONSUMERS KEEP THE ECONOMY GROWING?
Says Lynn Franco, Director of The Conference Board’s Consumer Research Center: “As the economic ramifications of September 11 continue to reverberate in the coming weeks and months, and the number of layoffs continue to rise, the economy faces tougher times ahead. While consumers have managed to keep the U.S. out of a recession for several years now, that soon may no longer be the case.”