Amid uncertainty about the economy, U.S. consumer confidence hit its lowest level in more than two years, the Conference Board said Nov. 27. The business research group said its consumer confidence index fell to 87.3 points, from a revised 95.2 points in October. The drop in consumer confidence was much steeper than the Wall Street consensus forecast of a 91.5-point reading.
The Conference Board's confidence index is closely watched by the markets as an indicator of consumer spending, which accounts for roughly two-thirds of U.S. economic activity.
The two sub-indexes in the Conference Board survey also slumped. Consumers' assessment of present conditions dropped to 115.4 points from 118.0 points in October. The forward-looking sub-index that measures expectations for the next six months plunged in November to 68.7 points from 80.0 points in October.
Consumers anticipating business conditions to worsen increased to 16.7% from 13.9%, and those expecting them to improve declined to 12.4% from 14%.
"Consumers' apprehension about the short-term outlook is being fueled by volatility in financial markets, rising prices at the (gasoline) pump and the likelihood of larger home heating bills this winter," Lynn Franco, research director said. "Despite this rather bleak outlook, consumers have not lost their holiday spirit and anticipate spending more on gifts this season than they did last Christmas," Franco said.
Their outlook on the job market also dimmed, with 23.2% saying jobs were "plentiful," down from 24.1% in October.
Copyright Agence France-Presse, 2007
