Consumer Confidence Plunges To a Two-Year Low
U.S. consumer confidence declined for the third month in a row in October to its lowest level in two years on growing concerns about weakening business conditions and the impact that could have on the job market.
The Conference Board said on Tuesday its index of consumer sentiment fell more than expected to 95.6 in October down from a revised 99.5 in September. The median forecast of economists polled by Reuters was for 99.0 in October.
The reading was the lowest since October 2005, when the index read 85.2, the Conference Board said.
The Present Situation index decreased to 118.8 in October from 121.2 in September. The Expectations index declined to 80.1 in October from 85.0 in September.
"The decline ... amounts to confirmation that there is a quite profound confidence deterioration under way," said Pierre Ellis, senior economist at Decision Economics in New York. "It's another quantum decline, the third in a row."
Lynn Franco, director of the Conference Board's consumer research center, said further weakening in business conditions had tempered consumers' assessment of current conditions and might "very well be a prelude to lackluster job growth in the months ahead."
The dollar hit session lows against the euro , while U.S. stocks added to losses and U.S.
short-term interest rate futures trimmed losses to be near steady after the unexpectedly weak confidence data.
"Consumers are definitely getting more gloomy," Ellis said. "The question is whether that will be reflected in their spending."
Consumer spending is responsible for driving about two-thirds of the U.S. economy's growth.
With the backdrop of the sharp declines in the consumer confidence gauge, if there were a serious decline in actual spending, "it would have immediate credibility as a genuine
reflection of consumer behavior," and would not be set aside as an exception, Ellis said.