U.S. consumer confidence fell unexpectedly sharply in November to its lowest since after
Hurricane Katrina in 2005 on worries about rising gas prices and financial market volatility.
The Conference Board said Tuesday its index of consumer sentiment fell, for a fourth straight month, to 87.3 from a revised 95.2 in October. The median forecast of economists polled by Reuters was for a reading of 91.6.
It was the lowest reading since October 2005, when it read 85.2, the Conference Board said.
Lynn Franco, director of the Conference Board's consumer research center, said the drop was primarily due to a sharp slide in the expectations index, which fell to its lowest since March 2003 at the outbreak of war in Iraq.
The expectations index slumped to 68.7 in November from a revised 80.0 in October.
"Consumers' apprehension about the short-term outlook is being fueled by volatility in the financial markets, rising prices at the pump and the likelihood of larger home heating bills this winter," Franco said.
"Consumers' inflation expectations have surpassed the spike experienced this spring and a larger percentage than last month expect stock prices to decline," she added.
The present situation index decreased to 115.4 in November from a revised 118.0 in October.
Franco said the present situation index, despite losing ground, suggested "the economy is expanding, albeit slowly."
Despite their relatively bleak outlook, however, consumers "anticipate spending more on gifts this season than they did last Christmas," Franco said.
Consumer spending is responsible for driving about two-thirds of the U.S. economy's growth.