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Tuesday, September 30, 2008

Consumer confidence edges up slightly

NEW YORK – Sept. 30, 2008 – The Conference Board Consumer Confidence Index, which had improved moderately in August, posted a slight gain in September. The Index now stands at 59.8 (1985=100), up from 58.5 in August. The Present Situation Index decreased to 58.8 from 65.0 last month. The Expectations Index that gauges consumer expectations six months in the future, however, increased to 60.5 from 54.1 in August.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “September’s increase in the Consumer Confidence Index was due solely to an improvement in the short-term outlook. However, these results did not capture all of the tumultuous events in the financial sector this month, and until the dust settles a bit more, we will not know the full impact on consumers’ expectations. Shocks, such as the 1987 crash, generally tend to have a temporary adverse effect on confidence, lasting on average two to four months, unless they result in significant job losses. Just as noteworthy, consumers’ assessment of current conditions continues to indicate that the current economic environment remains quite weak.”

Consumers’ appraisal of current conditions eroded further in September. Those saying business conditions are “bad” increased to 34.2 percent from 32.7 percent, while those claiming business conditions are “good” declined to 12.5 percent from 13.7 percent last month. Consumers’ assessment of the labor market continues to deteriorate. Those saying jobs are “hard to get” rose to 32.8 percent from 31.7 percent in August, while those claiming jobs are “plentiful” decreased to 12.2 percent from 13.5 percent.

Consumers’ short-term outlook improved again, but overall remains grim. Those anticipating business conditions to worsen over the next six months declined to 21.3 percent from 25.2 percent, while those expecting conditions to improve rose to 13.5 percent from 12.0 percent.

The outlook for the job market also moderately improved. The percent of consumers anticipating fewer jobs in the months ahead declined to 26.8 percent from 30.0 percent, while those anticipating more jobs increased to 11.8 percent from 10.7 percent. The proportion of consumers expecting their incomes to increase in the months ahead decreased slightly to 14.2 percent from 15.4 percent.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS, a global custom research company. The cutoff date for September’s preliminary results was September 23rd.

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