The closely watched Consumer Confidence Index of the Conference Board defied expectations by falling to its lowest level for seven and a half years in November.
The New York-headquartered group revealed its index slid from 85.3 in October to 82.2, confounding analysts’ projections of a rise to 86.5. November’s reading was the lowest since February 1994.
The drop, thought to be the result of continued concerns over layoffs, does not bode well for the holiday shopping season. Lynn Franco, director of the Board’s Consumer Research Center, stated that confidence was unlikely to pick up before the end of the year.
Despite widespread discounts, early signs are that shopping over the Thanksgiving period barely hit expectations, with the exception of budget chains such as Wal-Mart.
The Board added that the proportion of consumers rating the current state of the economy as bad rose from 20.7% in October to 21.4%, with a decline among those rating it as good from 18.6% to 16.4%. However there was a slight rise in optimism about the outlook for the next six months.
The news comes hot on the heels of the declaration by the National Bureau of Economic Research – considered the official arbiter of when recessions start and end – that the US entered its first recession for a decade in March.
In more bad news for the American economy, the Organisation for Economic Cooperation and Development slashed its US growth forecasts again, to 1% this year and just 0.75% next.
News sources: MediaWeek.com (US); BBC Online Business News (UK)