The US consumer confidence index plunged to 38 points from 61 last month, its lowest level since the index was founded in 1985. The slump bodes ill for US retailers ahead of the crucial holiday shopping season.
US consumer confidence plunged to a record low in October as stressed consumers turned sharply more pessimistic and a global financial crisis bites, the Conference Board said Tuesday.
The business research firm said its consumer confidence index plummeted to 38.0, down from 61.4 in September, sounding alarms on consumer spending that drives the bulk of the economy, just ahead of the important year-end holiday shopping season.
Most analysts had expected a more modest decline to 52.0.
"The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence," Lynn Franco, the Conference Board's chief economist, said in a statement.
"This news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season," she said.
The plunge in consumer confidence followed three consecutive months of modest gains. The research firm revised upward its September index to 61.4, from a prior estimate of 59.8.
Franco noted that the 23.4-point decline from September was the third-largest in the history of the series.
"In assessing current conditions, consumers rated the labor market and business conditions much less favorably, suggesting that the fourth quarter is off to a weaker start than the third quarter. Looking ahead, consumers are extremely pessimistic, and a significantly larger proportion than last month foresees business and labor market conditions worsening," she said.
Consumers' outlook on their earnings and inflation also soured.
Date created : 2008-10-28