"Consumer Confidence Falls Sharply"

Current economic conditions are now listed as the lowest since 1983. The problem is that this is a survey and we will probably want to wait at least a month or two to make sure that they just didn't get a bad draw here.

The next question is: why there was this large sudden drop? What happened in February? It isn't clear to me what that new news would be. Possibly readers of this blog have some idea.

A monthly poll showed consumers' confidence took a surprisingly sharp fall in February amid rising job worries. The decline ends three straight months of improvement and raises concerns about the economic recovery.

The Conference Board said Tuesday its Consumer Confidence Index fell almost 11 points to 46 in February, down from a revised 56.5 in January. Analysts were expecting only a slight decrease to 55.

The increasing pessimism is a big blow to hopes that consumer spending will power an economic recovery. Economists watch the confidence numbers closely because consumer spending accounts for about 70 percent of U.S. economic activity.

The February reading is a long way from what's considered healthy: A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.

The news sent stocks lower, overshadowing retailer reports that showed stronger holiday profits. The Dow Jones industrial average falling 74.29 points to 10,309.09 by midmorning.

One gauge, measuring consumers' assessment of current conditions, dropped to 19.4 from 25.2, the lowest level since 1983. The other barometer, which measures their outlook over the next six months and had been rising since October 2009, fell to 63.8 from 77.3.

The overall Consumer Confidence Index hit a historic low of 25.3 in February 2009 but then enjoyed a three-month climb to 54.8 in May, fueled by signs the economy might be stabilizing. Since then, it has been mired in a narrow range, dropping as low as 47, as rising unemployment took a toll, before climbing again for a three-month stretch.

February's reading is well below the 61.4 figure in September 2008, when the financial crisis intensified with the collapse of Lehman Brothers. The index has had an average reading of 95.6 since the Conference Board starting tracking the figures in 1967. . . .

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Blogger Angie said...

Curious as to what you mean by "a bad draw?" Isn't there some statistical amount of error accompanying the results?

2/23/2010 2:30 PM  
Blogger Harry Schell said...

My confidence as a consumer has been in free fall, and the deline accelerated at the end of last year contemplating ObamaCare, the capability of Congress to make reasonable decisions and general economic conditions (and lies about same from politicians).

Particularly weighty was the fraud in the jobs created/saved numbers, that got so bad Obama had the "analysis" pulled off the website so he could go back to claiming numbers he liked. Like his announcement his healthcare plan will only cost $950B...but CBO says the "plan" to vague to put numbers to.

Obama either lives in an alternate reality or is a pathological liar and sociopath. And this man has access to the "football"? And has surrounded himself with others similarly oblivious to any information they don't already have?

NO confidence...

2/23/2010 8:42 PM  
Blogger OldSouth said...

Oddly enough, a bit of the result may be from folks being cooped up by the bad weather. It makes them grumpy. If I'm right, April will show a bit of a surge, if the weather warms nicely.

But, more likely, it's that people see their friends and family losing jobs and beginning to struggle.

Blessedly, so far, we have not been too badly affected at our house, but I would not describe our attitude toward the present situation as 'confident'.

2/23/2010 10:16 PM  
Blogger Nucleus said...

I think that it is bad weather as well. There is lots of evidence linking sun exposure to depression and mood, Vitamin D being the major note here. So right in February people are getting very low on their Vitamin D, which drastically skews their interpretation of the world. Here in in Sunny Bozeman, I am chipper!

(Oops! Did I say that!?! Actually, the winters here are TERRIBLE, you will get Seasonal Affective Disorder for sure! Now go tell all your friends...)

See uvadvantage.org/


2/24/2010 2:42 AM  
Blogger Dad29 said...

The New Year did not come with new hiring; in fact, it came with even worse: lots of layoffs and cuts.

People aren't stupid: when ALL your neighbors have lost their jobs, it is a very serious situation.

Donne was right: "Therefore, do not ask for whom the bell tolls/It tolls for thee..."

2/24/2010 10:33 AM  
Anonymous Anonymous said...

I think it's related to the layoffs that took place in Jan and to housing woes. Add to that the creeping costs of food.

For a jaw dropper check out this bit of news Underwater Mortgages Hit 11.3 Million.

2/24/2010 11:52 AM  

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