Consumer confidence plunges to record low
By Ruth Mantell, MarketWatch
Last update: 11:24 a.m. EST Feb. 24, 2009Comments: 14WASHINGTON (MarketWatch) -- Consumer confidence plunged in February to a record low as concerns about jobs, income and the economy worsened considerably, according to the monthly Conference Board index reported Tuesday.
The February consumer confidence index fell to 25 from a downwardly revised 37.4 in January. Economists surveyed by MarketWatch had expected a February reading of 35.
The data arrive just a week after President Obama signed into law the far-reaching $787 billion economic stimulus package that officials hope will or save create millions of jobs.
"Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence," said Lynn Franco, director of the Conference Board's Consumer Research Center. "All in all, not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months."
Consumers' view of current conditions fell, with the proportion of respondents saying that jobs are "hard to get" rising to 47.8% in February from 41.1% in January, and those saying that business conditions are "bad" rising to 51.1% from 47.9%.
The reading on consumers' expectations fell to a record low, with those anticipating there to be fewer jobs in coming months rising to 47.3% from 36.9%. Those expecting "worse" business conditions also increased, hitting 40.5% from 31.1%, and those expecting more income fell to 7.6% from 10.3%.
Taken as a whole, the Conference Board's data are "breathtaking," said Ian Shepherdson, chief U.S. economist with High Frequency Economics.
"Expectations are usually sensitive to both gasoline and stock prices, but the cash-flow gain from falling gas prices is clearly being more than offset by the wealth destruction implied by the drop in stock prices," Shepherdson wrote in a research note. "The collapse in home prices is presumably hurting badly too."
The data came right before Federal Reserve chief Ben Bernanke told U.S. lawmakers that he believes economic growth will undergo a revival once the nation's troubled banks are fixed. See full story.
Buying plans affected
Those with plans to purchase cars within six months fell to 4.7% from 5.3%. Those with plans to buy homes also dropped, to 2.3% from 2.5%, while those with plans to make purchases of major appliances rose to 24.5% from, 23.6%.
Consumers' 12-month inflation expectations rose to 5.9% from 5.6%.
Also on the data front Tuesday, the Case-Shiller home price index published by Standard & Poor's showed that home prices in 20 major cities dropped by 2.5% in December from the prior month and by a record 18.5% from the final month of 2007 |
