US Consumer Confidence Plunges to Nine-year Low

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Last updated at: (Beijing Time) Wednesday, October 30, 2002

US Consumer Confidence Plunges to Nine-year Low

U.S. consumer confidence index fell for the fifth straight month in October to the lowest level in nine years, according to a survey released Tuesday.

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U.S. consumer confidence index fell for the fifth straight month in October to the lowest level in nine years, according to a survey released Tuesday.

The Conference Board, one of the leading economic research institutes in the world, reported that its Consumer Confidence Index plunged 14.3 points to 79.4 in October, its lowest reading since 1993, from a revised 93.7 last month. The index has decreased more than 30 points since May.

The survey, based on a representative sample of 5,000 households in the country, also showed that the Present Situation Index dropped from 88.5 to 77.5 in October, and the Expectations Index slumped to 80.7 from 97.2 in September.

"A weak labor market, the threat of military action in Iraq, and a prolonged decline in the financial markets have clearly dampened both consumer's confidence and their expectations for thenear future," said Lynn Franco, director of the board's Consumer Research Center.

"The outlook for the holiday retail season is now fairly bleak.Without the likelihood of a pickup in consumer spending, an already weak economic recovery could be weaker further," she added.

Consumers' assessment of current conditions was more negative. Those rating current business conditions as "good" fell from 18.5 percent last month to 15.6 percent. Those rating current conditions as "bad" rose from 23.8 percent to 27.6 percent.

Their attitudes towards labor market looked worsen. Americans reporting jobs were "plentiful" slipped from 15.9 percent to 14.8 percent in October. Those claiming jobs were "hard to get" increased to 27.3 percent from 25.4 percent in September.

Consumers' expectations for the next six months fell in the month. 19.0 percent of respondents expect an improvement in business conditions in the next six month, down from 21.6 percent in September, while those anticipating conditions to worsen jumpedto 14.1 percent from 9.7 percent last month.

The employment outlook for the short term was also less favorable in October. consumer expecting more jobs to become available over the next six months dipped to 15.0 percent from 17.3 percent last month. Those anticipating fewer jobs surged to 22.1percent from 16.8 percent.

The consumer confidence index was closely watched by the Federal Reserve and Wall Street, as consumer spending accounts fortwo-thirds of the nation's economic activity. In the morning session, the Dow index fell more than 100 points, the drop in the Nasdaq composite was above 2 percent.

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