Consumer confidence plummets in October

Don Hogsett, November 5, 2001

Americans already made anxious by terrorist attacks, and now growing wary about widespread layoffs and rising unemployment, turned and ran for cover during October, with consumer confidence sinking for a fourth straight month and falling to its lowest level in years, The Conference Board reported.

After plummeting 14.9 percent in September, consumer confidence dropped by another 11.9 percent in October, to a current reading of 85.5 (1985=100), its lowest reading since February 1994.

"The economic outlook is becoming increasingly pessimistic, with consumer sentiment continuing to fall," said Lynn Franco, director of The Conference Board's Consumer Research Center. "Widespread layoffs and rising unemployment do not signal a rebound in confidence anytime soon. With the holiday season approaching, there is little positive stimuli on the horizon."

Weighing current economic conditions, Americans are far less positive than they were in September, the business think tank reported. Those who called current business conditions 'bad' rose to 20.6 percent from 18.3 percent a month ago. And those who said jobs are 'hard to get' climbed to 20.7 percent from 18.1 percent the prior month.

Looking ahead, consumers are just as antsy about what the next six months holds in store. Consumers' outlook for the next six months continued to deteriorate, with those expecting business conditions to worsen rising sharply, to 20.3 percent from 15.8 percent in September. But not everyone is a pessimist, and those expecting an improvement in business conditions increased to 18.0 percent from 15.7 percent.

The unemployment outlook remained clouded, according to The Conference Board. Currently, 14.0 percent of consumers expect more jobs to become available, up slightly from 12.9 percent in September. But the number of consumers who expect fewer jobs to materialize shot up to 28.9 percent from 22.5 percent over the last 30 days.

Only 17.7 percent of the 5,000 consumers polled in the monthly survey expect a gain in their incomes, down from 21.1 percent in September.

Buying plans were mixed, The Conference Board reported. More consumers said they plan to buy a car, 8.5 percent, compared to 7.3 percent a month ago. But home-buying plans softened to 3.4 percent from 3.6 percent.

Consumer confidence by region

New England -9.4
Middle Atlantic -3.6
East North Central 4.3
West North Central -9.4
South Atlantic -17.8
East South Central -27.7
West South Central -7.0
Mountain -2.7
Pacific -8.3

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