American consumers’ confidence in the nation's economic health took its largest single-month plunge since late 1990, according to the New York-based Conference Board’s Consumer Research Center.
The findings, published yesterday, revealed that the ‘expectations’ [for the next six months] element of the CRC index of consumer confidence sagged to 77 in January, compared with 97 in December and the all-time high of 119 in May 2000. The January level of 77 has previously coincided with the onset of recession.
However, US citizens remain relatively sanguine about current business and employment conditions, the report says. These produced an index rating of 171 for January, down from 176 in December and 184 in May – a decline suggesting that only a slowdown is likely rather than a full-scale recession, according to CRC director Lynn Franco.
Ian Shepherdson of Frequency Economics, one of the few analysts to have predicted the sharpness of the decline in consumer confidence, does not preclude a soft landing: "People are reading about gloom and doom and job losses. They're saying, `It hasn't reached me yet, but I'm hunkering down.' “
Bruce Steinberg, chief economist for Merrill Lynch, feels likewise: "People are worried. The confidence index would have to fall a lot more before you have a contraction, but it's not a positive sign."
Overall, the index dropped to 114, down from 129 in December, having reached its peak at 145 in May. It is based on a questionnaire mailed monthly to a different group of 5,000 households, eliciting responses from around 3,500.
News source: New York Times