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Business

Consumer confidence at all-time low

Latest update : 2008-12-30

The index for consumer confidence in the United States plunged to its lowest level since 1967, when confidence statistics were first measured. According to analysts, the all-time low reflects consumers' fears for the upcoming year.

AFP - US consumer confidence plunged to a historic low in December amid the rapidly deepening recession and the outlook for the next six months is "quite dismal," the Conference Board said Tuesday.
  
The private research firm, which has been measuring consumer confidence since 1967, said the index tumbled to 38.0 in December from 44.7 in November due to the deteriorating economic conditions in the fourth quarter.
  
Consumers' outlook for the first half of 2009 remains "quite dismal," and they see "only a modest recovery" in the second half of the year, said Lynn Franco, research director at the Conference Board.
  
"The further erosion of the consumer confidence index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008," she said.
  
The record 38.0 figure was lower than the prior low record of 38.8 in October, and was weaker than the 45.5 reading which had been forecast by analysts.
  
The report was based on a survey of 5,000 US households through December 22.
  
The period was marked by an escalating global financial crisis and massive government efforts to bail out banks and unblock frozen credit. On December 1, the world's biggest economy officially was declared to have been in recession since December 2007.
  
Much of the plunge was due to a substantial deterioration in the present situation index, a component of the headline index, which plummeted to 29.4, from 42.3 in November and 43.5 in October.
  
The present situation index "is now close to levels last seen in the months following the 1990-91 recession, but is not as low as levels reached during the 1981-82 recession" when unemployment was high, Franco said.
  
Consumers grew increasingly concerned about rising unemployment amid surges in weekly jobless numbers after unemployment hit 6.7 percent in November, the highest rate in 15 years. The government jobs data for December are due on January 9.
  
Those saying jobs were "hard to get" rose to 42.0 percent in December from 37.1 percent in the prior month, while those saying jobs were "plentiful" fell to 6.2 percent from 8.7 percent.
  
"These labor market results point to another dismal employment report for December. We expect the loss of 475,000 jobs and a rise to 7.0 percent in the unemployment rate," said Peter Kretzmer, senior economist at Bank of America.
  
Kretzmer predicted an 8.1 percent "peak" unemployment rate in late 2009.
  
The Conference Board survey found those claiming current business conditions were "bad" increased to 46.0 percent in December from 40.6 percent in November, while those claiming they were "good" fell to 7.7 percent from 10.1 percent.
  
The expectations index, the other sub-index, slid to 43.8 from 46.2 in November, but was sharply higher than the 35.7 October reading.
  
Respondents anticipating fewer jobs over the next six months rose to 41.0 percent from 33.7 percent, while those expecting more jobs edged up to 9.7 percent from 9.2 percent.
  
Those expecting business conditions to deteriorate in the first half of 2009 jumped to 32.8 percent from 28.3 percent, while those expecting improvement rose to 13.4 percent from 11.5 percent.
  
"Both sub-indexes bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom," Franco said.
  
"In the meantime, however, the overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half."
  
A separate report highlighted the dismal year-end holiday season, a make-or-break period for retailers and a bellwether of consumer spending, which represents 70 percent of US economic activity.
  
Same-store chain store sales fell 1.5 percent in the week ended December 27 from the previous week, and were down 1.8 percent from a year ago, the International Council of Shopping Centers said.

Date created : 2008-12-30

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