CONSUMER CONFIDENCE DIVES

The Conference Board has just released its monthly consumer confidence measure, and it was a big miss.
The measure dropped to 71.2 in October, down from 79.7 and missing economist expectations of 75.0.

“Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations,” Conference Board Director Lynn Franco said in a statement.

“Similar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 2012, and the government shutdown in 1995/1996. However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months.”

Respondents expecting business conditions to improve over the next six months dropped to 16% from 20.6%, but those expecting conditions to worsen jumped to 17.5% from 10.3%, according to the report.

Here’s the full release from the Conference Board:

The Conference Board Consumer Confidence Index®, which had declined moderately in September, decreased sharply in October. The Index now stands at 71.2 (1985=100), down from 80.2 in September. The Present Situation Index decreased to 70.7 from 73.5. The Expectations Index fell to 71.5 from 84.7 last month.

The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was October 17.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations. Similar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 2012, and the government shutdown in 1995/1996. However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months.”

Consumers’ assessment of current conditions declined moderately. Those claiming business conditions are “good” decreased to 19.0 per cent from 20.7 per cent, however, those claiming business conditions are “bad” edged down to 23.0 per cent from 23.9 per cent. Consumers’ appraisal of the job market was less favourable than last month. Those saying jobs are “plentiful” was virtually unchanged at 11.3 per cent from 11.4 per cent, while those saying jobs are “hard to get” increased to 35.8 per cent from 33.6 per cent.

Consumers’ expectations, which had softened in September, decreased sharply in October. Those expecting business conditions to improve over the next six months fell to 16.0 per cent from 20.6 per cent, while those expecting business conditions to worsen increased to 17.5 per cent from 10.3 per cent.

Consumers’ outlook for the labour market was also more pessimistic. Those anticipating more jobs in the months ahead decreased to 15.3 per cent from 16.1 per cent, while those anticipating fewer jobs increased to 22.7 per cent from 19.1 per cent. The proportion of consumers expecting their incomes to increase rose to 15.8 per cent from 15.1 per cent, however, those expecting a decrease rose to 15.4 per cent from 13.9 per cent.

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