US Consumer Gloom Deepens as Prices Climb

29 May 2008

NEW YORK: The collapse of the US housing market, the frail economy and soaring gasoline prices have driven-down consumer confidence to a sixteen-year low and to a level usually associated with recession.

Latest data from research body, the Conference Board, shows its Consumer Confidence Index fell from a low 62.8 reading in April to an even weaker 57.2 level in May - the lowest point for the survey since October 1992. The index polls 5,000 US households each month.

Comments research director, Lynn Franco: "Consumers' inflation expectations, fuelled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead.

"As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead."

The sharp drop in the feel-good factor has defied the Federal's Reserve's interest rate cuts and the administration's tax rebates to stimulate spending.

Notes BMO Capital Markets economist Benjamin Reitzes: "Despite the boost from nearly $46 billion (€29m; £23m) in tax rebates issued to date, consumer confidence continues to plummet."

Data sourced from BBC Online and Chicago Tribune; additional content by WARC staff