Consumer Confidence Index Deteriorates to Five-Year Low

April 30, 2008

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Financial Services

The Conference Board Consumer Confidence Index, which had declined sharply in March, fell further in April and now stands at 62.3 (1985=100), down from 65.9 (revised upward) in March, according to the Conference Board.

That’s the lowest it’s been since March 2003, MarketWatch reported.

The Present Situation Index decreased to 80.7 in April from 90.6 in March; that’s the lowest since December 2003. The Expectations Index was slightly up, to 50.1 from. 49.4 in March; it’s been lower just five times since the survey began, in 1967.

conference-board-cci-april-2008.jpg“This month’s decline in Consumer Confidence was the result of yet another sharp decline in the Present Situation Index. This continued weakening suggests that not only has the feeble level of growth in the first quarter spilled over into the second quarter, but that economic conditions may have slowed even further,” said Lynn Franco, director of The Conference Board Consumer Research Center.

“And, not only are lackluster business and job conditions eroding confidence, but rising gasoline prices are undoubtedly heightening concerns. Consumers’ inflation expectations continue to rise and this measure now matches the all-time high reached in the aftermath of Hurricane Katrina,” Franco said.

The percentage of respondents intending to take a vacation over the next six months has fallen to a 30-year low, she added, saying that’s yet another sign of consumers’ turning more cost-conscious.

Other data issue by the Conference Board:

  • Consumers’ assessment of current conditions weakened further in April: Consumers claiming business conditions are “bad” increased to 26.7% from 25.5%, while those claiming business conditions are “good” was virtually unchanged at 15.3% vs. 15.6 last month.
  • Consumers’ appraisal of the labor market was also more negative than last month: The percentage of consumers saying jobs are “hard to get” rose to 27.9% from 24.5%, while those claiming jobs are “plentiful” declined to 16.6% from 19.2%.
  • Consumers’ short-term outlook remained grim in April: Consumers expecting business conditions to worsen over the next six months increased to 27.0% from 26.0%, while those anticipating business conditions to improve increased to 10.1% from 8.6% in March.
  • The outlook for the labor market was also mixed, but still pessimistic: Those expecting fewer jobs in the months ahead increased to 32.8% from 29.3%, while those anticipating more jobs increased to 9.0% from 8.0%. The proportion of consumers expecting their incomes to increase declined to 15.1% from 16.1%.

About the data: 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. The cutoff date for April’s preliminary results was April 22.

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