US consumer confidence falls to recession levels in October

25 October 2011 19:12  [Source: ICIS news]

WASHINGTON (ICIS)--US consumer confidence fell in October to levels not seen since the recession, according to results of a key survey issued on Tuesday, with consumers increasingly worried about business conditions, jobs and their incomes.

The Conference Board said that its monthly survey of consumers showed a sharp decline in October from September, with the consumer confidence index (CCI) falling to 39.8 this month from the prior month’s measure of 46.4 – a 14% drop.

That decline more than offset a marginal gain seen in September’s index, although it was not as sharp as Augusts's 25% drop in consumer confidence.

The index is measured against the baseline setting of 100 assigned to 1985.

“Consumer confidence is now back to levels last seen during the 2008–2009 recession,” said Lynn Franco, director of the board’s consumer research centre.

The October survey also revealed a decline in consumer expectations for the future, Franco said, with that subsidiary index dropping to 48.7 for this month from the 55.1 recorded in September.

“Consumer expectations, which had improved in September, gave back all of that gain and then some,” Franco said, “as concerns about business conditions, the labour market and income prospects increased.”

The “present situation” index, which gauges consumer sentiment about current economic conditions, also fell in October, the board said, dipping to 26.3 from September’s 33.3 mark.

That decline in the present situation index, said Franco, was “the sixth consecutive monthly decline, as pessimism about the current economic environment continues to grow”.

The survey also indicated that consumers are more worried about their prospects for income growth, with the proportion of consumers anticipating a wage or salary increase falling to 10.3 in October from the already low 13.5 measure in September.

Consumer confidence and expectations are critical bellwethers for the US economy, as consumer spending accounts for as much as 70% of the nation’s commercial and productive activity.

The board’s report of a new downturn in consumer confidence comes in the wake of a separate business group study showing that top US corporate executives have lowered their expectations for the next six months.

The New York City-based Conference Board  is a 94-year-old business analysis group.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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