Mood of Consumers Posts Record Decline in October

Consumer confidence suffered its steepest monthly drop on record in October, a survey showed on Friday, as the worst financial crisis in generations continued to take its toll.

Crowd of people on the street
Crowd of people on the street

The Reuters/University of Michigan Surveys of Consumers said its final reading of its index of confidence plunged to 57.6 in October from 70.3 in September.

That was just slightly below economists' expectations for a reading of 57.8, according to the median of their forecasts in a Reuters poll.

It was up marginally from 57.5 recorded in the Surveys' of Consumers preliminary report released on October 17.

"Consumers reported the most dismal assessments of their current financial situation ever recorded,'' the report said.

The index was its lowest since a reading of 56.4 in June of this year.

The report said there have previously only been four surveys that posted double-digit declines, "and all resulted from severe economic dislocations, with the losses accelerated by fear and panic.'' The University of Michigan confidence index dates back to 1952.

Its record low was 51.7, which it hit in May 1980.

Consumers rated current economic conditions the worst on record, with this gauge falling to 58.4 from September's 75.0.

The gauge of one-year inflation expectations eased to 3.9 percent from September's 4.3 percent.

Five-year inflation expectations eased to 2.9 percent from 3.0 percent in September.

The outlook for the future was dire, with the index of consumer expectations falling to its lowest since July this year, when soaring energy prices were still hitting sentiment.