Consumer Confidence Plummets to Lowest Level Since 1992
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The Conference Board's consumer confidence index for June tumbled to levels not seen since 1992 at 50.4 in Tuesday's report, led by a near 10-point decline in the present situation component. Economists were looking for a moderate decline to 56.0.
The previous month's reading of 57.2 was revised upwards to 58.1. The three-month average for consumer confidence is now at 57.1, down from 62.3 last month. One year ago, the index stood at 105.3.
The expectations category fell to 41.0, down from 47.3 in May, and the present situation component fell to 64.5 from 74.2 in May.
Lynn Franco, director of the Conference Board's Consumer Research Center, said, "Looking ahead, consumers' economic outlook is so bleak that the Expectations Index has reached a new all-time low. Perhaps the silver lining to this otherwise dismal report is that Consumer Confidence may be nearing a bottom."
Consumers' appraisal of the job market continued to be pessimistic in June, with those saying jobs were "hard to get" increasing to 30.5% from 28.3% and those claiming jobs were "plentiful" decreasing to 14.1% from 16.1%.
Inflation expectations remained at 7.7%, a record high.
Respondents claiming business conditions were "bad" increased to 32.5% from 29.7% while those claiming business conditions were "good" declined to 11.5% from 13.0%.
In the labour market, consumers expecting fewer jobs in the months ahead rose to 35.5% from 32.3%, while those anticipating more jobs fell to 8.0% from 9.0%. Meanwhile, the proportion of consumers expecting their incomes to increase declined to 12.3% from 14.1%.
"Consumers' assessment of present-day conditions continues to grow more negative and suggests the economy remains stuck in low gear," added Franco.
Earlier in the month, the preliminary consumer sentiment survey released from Reuters and the University of Michigan tumbled beyond a 26-year low to 56.7, nearing the all-time historic low of 51.7 in May 1980. However, over the past month, the weekly ABC survey of consumer comfort moved up from a 16-year low of -51 to -44.
Before the economic turmoil began, the Conference Board's consumer confidence index reached an annual high of 111.9 in June 2007. The subprime crisis created a four-month decline to 87.0 in November before rebounding by a few points before the holidays. The index then resumed its downward trend in January, falling from 87.9 to 57.2 in the first five months of 2008.
By Patrick McGee and edited by Cristina Markham
©CEP News Ltd. 2008
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