The Conference Board's U.S. consumer confidence index plunged far beyond expectations to hit an all-time low of 38.0 in October. The previous all-time low was 47.3, reached in February 1992. More recently, a 16-year low of 51.0 was reached last June.

The previous month's headline reading of 56.9 was revised up to 61.4. One year ago, the index stood at 95.2.

The expectations category tumbled to 35.5, down from 61.5 in September, while the present situation component fell to 41.9 from 61.1.

One-year inflation expectations reversed the trend seen over the past two months and moved up 6.9%, the highest level since March.

Lynn Franco, director of the Conference Board Consumer Research Center, said the impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence. She noted the 23.4-point decline is the third largest on record, and that the outlook is "extremely pessimistic."



"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," Franco said.

The closely watched labour differential between good and bad jobs fell to -28.3 in October, down from -19.6 in September. Just 9.2% of participants said present labour conditions were good, while nearly 40% said conditions were bad.

Consumers' appraisal of the job market continued to worsen in October, with those saying jobs were "hard to get" increasing to 37.2% from 32.2% and those claiming jobs were "plentiful" decreasing to 8.9% from 12.6%.

"Looking ahead, consumers are extremely pessimistic, and a significantly larger proportion than last month foresees business and labor market conditions worsening," Franco said. "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."

By Patrick McGee and edited by Nancy Girgis
©CEP News Ltd. 2008