Confirms Rasmussen:
AP
Confidence Drops in September on Katrina
Friday September 9, 1:41 pm ET
By Jeannine Aversa, AP Economics Writer
Confidence Tumbles in September As Hurricane Katrina Rattles Consumers
WASHINGTON (AP) -- Consumer confidence tumbled in early September as Hurricane Katrina made people feel increasingly anxious about the economy's prospects and their own in the months ahead, according to figures released Friday.
The RBC CASH Index, based on polling by Ipsos, showed that consumer confidence sank to 61.5 in September, the lowest since early March 2003, when confidence dropped to 61.4 as a nervous country hunkered down for the start of the Iraq war.
September's decline -- the third straight month that confidence fell -- followed a reading of 72.6 in August. The latest showing also underscored just how much consumers' confidence has deteriorated compared with a year ago. In September 2004, consumer confidence was a robust 103.4.
The confidence barometer provides a glimpse of consumers' attitudes in the aftermath of Katrina, which barreled into the Gulf Coast last week, spreading death and destruction.
"There is a great deal of fear and uncertainty out there. On the one hand it's sad to see peoples' lives disrupted and destroyed. On the other hand, people are worrying about how they are going to pay their gasoline bills and their home heating bills this winter," said Ken Mayland, president of ClearView Economics. "It makes for a pretty bleak view of the future," he said.
The storm knocked out essential oil and gas facilities -- catapulting already elevated gasoline above $3 a gallon and driving other energy prices even higher. It choked transportation and shipping and wiped out businesses and homes. The jolt from the disaster will mean slower economic activity in the months ahead and more caution on the part of businesses around the country to hire, economists predicted.
The disaster is raising not only economic uncertainties but also is touching off a political furor over what critics called a botched government response.
Taking the biggest hit were consumers' feelings about economic expectations over the next six months, including conditions in areas where they live or work and their own financial positions.
This measure -- which has been falling all year -- came in at a negative 13.5 in September. That was the worst reading on record and was the first time this measure sank into negative territory. In August, the "expectations" measure came in at 32.2.
Economic fallout from Katrina made people more even skittish about high energy bills, analysts said. People also have been worried about a housing bubble that could suddenly pop, sending prices downward, economists have said.
The confidence index is benchmarked to a 100 reading on January 2002, when Ipsos, an international polling firm, started the gauge.
Economists monitor confidence for indications about consumers' willingness to spend. Consumer spending accounts for a big slice of economic activity in the United States. Analysts predict that high energy prices will crimp spending by both consumers and businesses, slowing economic growth in the second half of this year by as much as 1 percentage point on an annualized basis.
The overall consumer confidence index for September was based on the results of 1,002 adults surveyed Tuesday through Thursday about their attitudes on personal finances and the economy. Results of the survey had a margin of error of plus or minus 3.1 percentage points |
