War Jitters Drag US Consumer Confidence to Nine-Year Low

30 January 2003

US consumer sentiment is at its lowest level since November 1993, according to the latest figures from the Conference Board.

The New York-based research group’s closely watched confidence index dropped from 80.7 in December to 79.0 this month, wiping out the gains made since it sank to what was a nine-year low of 79.4 in October [WAMN: 30-Oct-02].

“With the threat of war looming, consumers have grown increasingly cautious about the short-term outlook,” diagnosed Lynn Franco, director of the Board’s Consumer Research Center.

Franco’s comments were backed by the component of the index measuring expectations for the next six months. The number of respondents expecting business conditions to pick up slid from 21.1% to 17.7%, while those predicting a decline grew from 11% to 14%.

Nevertheless, there was a silver lining of sorts – economists were predicting an even worse reading of 78.1.

There were also glimmers of hope in new figures from the Commerce Department. December sales of new houses rose 3.5% to a record high of 976,000, while orders for durable goods (those designed to last more than three years) increased 0.2%.

The latter figure, however, was below predictions of a 0.9% rise and was boosted by spending by the military – without this, durable goods orders dipped 0.2%, suggesting continued weakness in business investment.

Data sourced from: multiple sources; additional content by WARC staff