In contrast to earlier reports that US consumer confidence had risen slightly in October [WAMN: 29-Oct-01], the closely watched confidence index of the Conference Board fell to its lowest level since February 1994.
The index fell more sharply than anticipated, from 97.0 in September to 85.5 – the fourth consecutive monthly fall. The Conference Board’s more pessimistic outlook than some other surveys is thought to reflect its emphasis on consumers’ perceptions of the job market, which has been in rapid decline since September 11.
Based on a survey of around 5,000 American households, the index is made up of two components, neither of which makes encouraging reading.
The first focuses on consumers’ assessment of the current state of the job market and the economy in general. This tumbled to 107.6, down from 144.5 in August – the biggest two-month decline since 1980.
The second measures respondents’ views on the outlook for jobs and business in the next six months; a barometer which fell from 78.1 in September to 70.8 – the lowest figure since 1993. A reading below 80, warned Conference Board economist Lynn Franco, normally indicates recession.
“This is telling us that current [economic] conditions are eroding rather quickly,” she continued.
News source: Wall Street Journal