Consumer Confidence Reaches New All-Time Low

February 25, 2009

This article is included in these additional categories:

Analytics, Automated & MarTech | Financial Services | Retail & E-Commerce

The Consumer Confidence Index reached an historic low in February 2009, according to the Conference Board, which reported a sharp decline from 37.4 in January to 25.0 in February, writes Retailer Daily.


The Present Situation Index declined to 21.2 from 29.7 last month, and the Expectations Index decreased to 27.5 from 42.5 in January. Before this month, January 2009 marked the historic low point of the Index.

When asked to appraise overall current economic conditions, consumers indicated growing concern that things are not improving. The percentage of consumers rating business conditions as “bad” rose from to 51.1% from 47.9%, with the percentage saying business conditions are “goo” rising to 6.8% from 6.5% last month. In the area of employment, the percentage of consumers saying jobs are “hard to get” increased to 47.8% from 41.1%, while those stating jobs are “plentiful” fell to 4.4% from 7.1 %.

Also, the percentage of consumers expecting fewer jobs in the months ahead increased to 47.3% from 36.9%, while those expecting more jobs declined to 7.1% from 9.1%. The proportion of consumers expecting an increase in their incomes declined to 7.6% from 10.3%.

In the next six months, 40.5% of consumers now anticipate business conditions will worsen, up from 31.1%, while 8.7% expect them to improve, down from 12.8% in January.

According to the January 27-28, 2009 minutes of the Federal Open Market Committee, the members of the Board of Governors and the presidents of the Federal Reserve Banks projected that real GDP (gross domestic product) would contract in 2009, the unemployment rate would increase substantially, and that consumer price inflation would be significantly lower than in recent years.

Federal Open Market Committee participants generally expected that the recovery would be unusually gradual and prolonged, and all participants anticipated that unemployment would remain substantially above its longer-run sustainable rate at the end of 2011. A few participants indicated that more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates of output growth and unemployment and by an appropriate rate of inflation.

Lynn Franco, director of The Conference Board Consumer Research Center, said that these figures reflect consumer concerns over the current state of the economy. “The decline in the Present Situation Index, driven by worsening business conditions and a rapidly deteriorating job market, suggests that overall economic conditions have weakened even further this quarter,” she said. “Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever.”

The index is based on a monthly sample of 5,000 representative US households.

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