Posted on 09/27/2005 10:34:48 AM PDT by ex-Texan
Consumer confidence recorded its steepest point drop in 15 years in September, as Americans grappled with the economic uncertainty wrought by hurricanes, soaring gas prices and rising interest rates.
The Conference Board said its consumer confidence index fell 18.9 points to 86.6 from a revised reading of 105.5 logged in August. That marked the largest one-month decline in the index since October 1990 and put the measure at its lowest level in two years.
Lynn Franco, director of the Conference Board's Consumer Research Center, attributed the decline to the effects of Hurricane Katrina, high prices at the pump and pessimism about the job market.
"Historically, shocks have had a short-term impact on consumer confidence, especially on consumers' expectations," Franco said in a statement. "Fuel prices remain high, though they have retreated in recent days, and when combined with a weaker job market outlook, will likely curb both confidence and spending for the short run."
She did add that once "rebuilding efforts take hold and job growth gains momentum, consumers' confidence should rebound and return to more positive levels by year-end or early 2006."
The consumer confidence report follows a slew of disappointing earnings forecasts from major retailers for the second half of 2005, including Wal-Mart (WMT:NYSE - commentary - research - Cramer's Take), the world's largest retailer.
Earlier this month, the University of Michigan reported that its consumer sentiment index plunged to a 13-year low of 76.9 in a preliminary reading for September from the 89.1 recorded for August. Economists on Wall Street were expecting a milder drop to 85.
"The key question now is how quickly [consumer confidence] recovers," said Ian Shepherdson, chief U.S. economist with High Frequency Economics. "We are hopeful the October numbers will show a partial rebound."
We're DOOMED!!!
We are doomed!
Nothing quite like learning that your local town councilmen can steal your home any time they want to under eminent domain for making you feel less than warm and fuzzy about plunking down huge money for a house...
The hurricane probably hurt that a lot.
I think it will kick back up in a few months.
Just like the media led the stories of rape and murder in New Orleans that did not happen, they will make sure they do everything they can to depress consumer confidence.
Might, gas prices and the Fed's constant uping of the rates are huge problems. I think most people understand the gulf issue.
of course, Greenjeans didn't help.....no matter what people say.....and even though all the finacially sound and debt-free freepers deny Greenjeans actions hurting THEM, the truth is, tons of people will be hurt, and if that forces more job losses, more foreclosures, a declining tax revenue, then it is OUR problem.....
" they will make sure they do everything they can to depress consumer confidence"
Of course they've been trying to do that ever since Bush took office. So why do you their attempts are suddenly bearing fruit now?
This was a 2 week story. People did not shop.
From the Conference Board web site:
The questions asked to compute the indexes have remained constant throughout the history of the series. The Index is based on responses to 5 questions included in the survey:
Respondents appraisal of current business conditions.
Respondents expectations regarding business conditions six months hence.
Respondents appraisal of the current employment conditions.
Respondents expectations regarding employment conditions six months hence.
Respondents expectations regarding their total family income six months hence.
For each of the 5 questions, there are three response options: POSITIVE, NEGATIVE and NEUTRAL.
The response proportions to each question are seasonally adjusted. For each of the five question (above), the POSITIVE figure is divided by the sum of the POSITIVE and NEGATIVE to yield a proportion, which we call the "RELATIVE" value. For each question, the average RELATIVE for the calendar year 1985 is then used as a benchmark to yield the INDEX value for that question. The Indexes are then averaged together as follows: Consumer Confidence Index: Average of all 5 Indexes; Present Situation Index: Average of indexes for questions 1 and 3; Expectations Index: Average of Indexes for questions 2, 4, and 5.
I think they actually poll consumers.
Naturally, that's subject to all the usual polling caveats. But just as obviously, this has always been the case.
Are you saying that the figures for consumer confidence in the article are false, or that they shouldn't be reported in any case because they will further depress consumer confidence? If the numbers are accurate, shouldn't they be reported?
Here's how I see this playing out:
More and more analysts predict a drop in oil prices coming. I think once the Katrina and Rita damaged refineries are back up the prices will drop steadily but noticeably-the fear factor will be eliminated and since a large part of the oil price spike has been speculation, once they start dropping they'll keep dropping. Will we see $35 oil? Doubtful, but I wouldn't be surprised to see it drop below $45 or $50.
There will be at least a small consumer surge around Christmas. If we go into 2006 with gasoline prices back down to even the levels of earlier this year, I could see things looking pretty good next year.
"This was a 2 week story. People did not shop."
You really think so? I think it was the spike in gas prices that put a scare into people. That, plus maybe the realization that the federal gvt expenditures are exploding and somebody somewhere is going to have to pay for that.
I'm saying that the media does everything in their power to make SURE that consumer confidence drops. All in their quest to make the president look bad.
The media does not report that our economy is the strongest in the world.
They do not report the information taken from the Census data that the "poor" in this country typically own their own cars, have air conditioning, large screen televisions, cable, etc. The way we used to think of poor was people who could not afford food.
That is no longer true, but most people don't know it. They also don't understand fully that the choices people make typically are what puts people in poverty.
I second that emotion. My investor friends actually welcome the "Wall of Worry."
That's right. We're doomed. It's all over now but the screaming.
Starting tomorrow morning, when I arise, I'm going to get UNDER the bed - and stay there.
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