The consumer confidence index plunged to 25 in Feb., down from 37.4 in Jan. Many economists only predicted it would fall to 35. The index is based on a monthly survey of 5,000 households, responding “positive”, “negative” or “neutral” to five questions about how they feel about certain economic conditions. A decline means people are going to be spending less. Here’s a more specific breakdown of how people responded to the specific questions:
Today’s confidence survey showed the share of consumers who said jobs are plentiful slumped to 4.4 percent from 7.1 percent last month. The proportion of people who said jobs are hard to get increased to 47.8 percent, the highest level since 1992.
Americans also viewed their financial well-being in future months with more pessimism. The Conference Board’s gauge of the outlook for the next six months decreased to 27.5, also the lowest on record, from 42.5 in January.
The share of respondents expecting their incomes to rise over the next six months dropped to 7.6 percent from 10.3 percent.
The measure of present conditions dropped to 21.2 from 29.7.
…”The customer’s very tentative,” J.C. Penney’s Chief Executive Officer Myron Ullman said on a conference call with investors. “They’re buying what they need and they’re being very smart about how they spend their money.”
U.S. Consumer Confidence Collapsed to Record Low (Update1) [Bloomberg] (Photo: divemasterking2000)
More From Consumerist
-
Americans Are More Confident About The Economy Than We’ve Been In 7 Months
-
Survey: Consumer Confidence At Highest Level In Four Years
-
The Good News Is Consumer Spending Is Up — But Only Because Gas Is So Pricy
-
CNET Writer Quits Over Anti-Hopper Order That Reportedly Came Directly From CBS CEO
-
House Flipping Is Cool Again, Say Reality TV Producers With Very Short-Term Memories
Oooh, hold on to your hats guys, this will make the market tank.
Hooray herd!
@Oranges w/ Cheese: But, but…If we dont spend money, the market tanks, but if we spend like crazy, the market tanks?
Were dooooooooooooomed!
@Oranges w/ Cheese:
Well that’s kinda funny, because the Dow is up over 170 points now.
Don’t you know that Wall Street works in reverse?
WOW! FIVE THOUSAND HOUSEHOLDS?!
Since 0.0001% of the country has little confidence in the economy, we’re all fucked!
What a stupid, unscientific, and completely illogical survey. Sounds like the perfect metric for a bank run or panic on Wall Street.
@BlackMage is doing the Time Warp agaaaaaaain!!!: It’s called a statistical sample. If they counted every household, only today would we be learning that consumers are pessimistic about the economy in 1992.
@rpm773:
It’s called a sample size that should be a realistic example of the population, not a fraction of less than one hundredth of a percent. With today’s electronic communication, this shouldn’t be an issue.
@BlackMage is doing the Time Warp agaaaaaaain!!!: Except if you only use computers, you only find out how people who can afford computers and internet feel ( and yes there are still people without both of those, and they are probably the most pessimistic about all of this.) Phones are more widespread, allowing for a better sampling. I wouldn’t think 5000 too low a sample size, as long as within that 5000, all groups are equally represented.
@K-Bo: If computers scream wealthy, don’t landlines scream out of a job sitting around the house? Just sayin…
@HIV 2 Elway Resurrected: Nah. Having a landline doesn’t necessarily imply that you don’t have a cell phone or a computer.
@BlackMage is doing the Time Warp agaaaaaaain!!!: And what’s realistic, since you have a problem with the study and all?
@rpm773: So there is no middle ground? You could sample 5000 people in one market and still get a poor representation of consumer confidence. Something that has such an impact on markets needs to be more statistically significant.
@HIV 2 Elway Resurrected: I have no idea. I’m not at statistician. I just told the guy what was going on.
Based on the replies, I suspect we’re going to have a lot of experts chiming in really soon. Some may even have formal training in statistics.
@BlackMage is doing the Time Warp agaaaaaaain!!!: @HIV 2 Elway Resurrected: I think there is a misunderstanding here. Sampling is designed precisely for situations like this. 5000 respondents may not seem like much, but it’s surprising how few you need to get a representative sample for a large population.
For example, for a population of 300 million, to be 95% confident that your results are within 2 percentage points of the actual population, you’d need about 2400 people.
@BlackMage is doing the Time Warp agaaaaaaain!!!: Wait, we have 5 billion people in the US? No wonder we’re screwed.
@BlackMage is doing the Time Warp agaaaaaaain!!!: What most of you are forgetting is that all polls are conducted with a much smaller sample size that the group being polled. The real issue is making sure the group being polled is a good representation of the public at large. HIV 2 Elway, you’re right if they are all in one market that would not reflect the US as a whole. This is exactly why they call households all across the US.
@BlackMage is doing the Time Warp agaaaaaaain!!!:
300 million people / average household size of 3 = 100 million households in the US (probably a little less than that in actuality).
5000 households / 100 000 000 households = .005% of all households surveyed.
That doesn’t seem like much. But if you do a random sampling from households, this is easily a statistically significant sampling. As someone else said a moment ago, if they tried to do, say, 50% of households, they’d end up with the measure about 5 years too late for it to matter. This seems pretty good to me.
@BlackMage is doing the Time Warp agaaaaaaain!!!: That was truly one of the dumbest comments I have ever seen in any public forum. Methinks you’re not much of a Nate Silver fan, either.
@BlackMage is doing the Time Warp agaaaaaaain!!!: And the households were in Detroit and East Palo Alto.
@undefined: @BlackMage is doing the Time Warp agaaaaaaain!!!: I’d hate to see you take a sociology course.
You can prove anything with a poll.
@K-Bo: @TheRedSeven: BlackMage would respond but is too busy closing all bank accounts and stocking up on guns, ammo and Spam now that you’ve explained this so well. Sometimes ignorance is bliss.
@KyleOrton: It’s kind of like explaining how great mass warps light to someone, then the dawning realization sinks in that that person isn’t quite convinced that gravity doesn’t exist…
Why is it always JC Penny in these articles? They always struggle. Wal-Mart probably says “bring on the recession!” in their conference calls, but no one quotes them. The good thing about this recession is it could shake out some dead weight in retail. But, where will the media go to get a juicy quote about how bad things are if the JC Pennies and Circuit Cities are gone?
@Trencher93: I thought the JC Pennies were already gone…
@Trencher93: I don’t think shaking the dead weight out of retail is a good thing. Although I would like certain stores to disappear, their existence creates more competition for the consumer which is a very good thing and these stores also employ people who need to keep their jobs which is a must in this economy.
If walmart was the only game in town we all would be crying how they can raise the prices and charge us whatever they want for their products, so even if you don’t like the stores, having more stores is not a bad thing.
Duh comes to mind.
@undefined: @bduddy: I’d be happy if he just pokes around the Internet and learns a bit about sample size and standard deviation. Sigh.
Hmmm, we have the 24 hours networks doing nothing but reporting the economic crisis, foreclosures, layoffs, bailouts, etc. Are we really all that surprised that consumer confidence is slighly shaken?
@Trai_Dep: Dude. First I learn there are 5 billion people in this country and then you blow my mind with that? Crazy….
Gah! Numbers without meaning! What is a “Confidence Index” and why are we concerned that it’s going down? What’s the acceptable range? What is the absolute lowest and absolute highest? Do we want it to be low or high? Is it a percent? 25% of people think the economy sucks, or they’ll not be able to afford Elmo Tickle Hands? These must be a measure of something, but we need to know what that is.
My favorite line:
The measure of present conditions dropped to 21.2 from 29.7
The “measure of present conditions?” So the circumference of my average scoop of ice cream is down from 29.7 to 21.2 centimeters. Big deal. I’m on a diet.
@chrisjames: Come on, quit babbling and do a little Google. Is it that difficult? [www.investopedia.com]
No surprise. Our hope/change, change/hope President is one negative guy. He has been talking down the ecomony with his gloom and doom for the last month. I get the impression we have 92% of home mortgages in default. Not the reality of 8%.
@kwsventures: If only he said – and only said – twice daily, “the fundamentals of our economy are strong”. That’d fix everything!
@kwsventures: Perhaps if he said, we’re just a nation of whiners, that the economy would be through the roof, fundamentals be dammed. Or if he blamed the media for the crisis like certain politicians/radio hosts did before the bottom finally fell out and they had to admit there was a problem.
In seriousness, consumer sentiment is a factor. I think BHO needs to temper his doom and gloom with some optimism (e.g. “it will get worse before it gets, better, but it will get better”). He’s starting to do that now, we’ll see if that takes hold in any significant way.
@kwsventures: If the administration was telling everything, then it would be worse than that. Negative?, right, its far worse than they have been saying. Right now this is the worse economic downturn in United States history outside of the Great Depression.
To really give this any credibility, they should list what the 5 questions are (not paraphrased, actual wording) and give at least some indication of the location of the 5000 respondants. Obviously not a pinpoint map of every address, but some indication.
I could make a survey like this say anything I wanted it to with the right wording and by taking my sample from the right place.
@squablow: Sounds like an informative project for you, then. I hear the Google lets you look up stuff! On the internet! Based on typing in things that interest you!
@squablow: I agree that the pollsters could have an agenda. So, it would be nice to get an idea of the sample demographics and questions.
@ARP: This is the same index that University of Michigan has been running every month for many years. Try Google sometime yourself.
@papahoth: I didn’t make the snide remark about that, Trai_Dep did. But thank you, I didn’t know this was the U of M consumer confidence index.
@ARP: Jeezus, fellahs, *really* try the Google one of these days. Sort of embarrassing to have to have someone spoon-feed you original-source material, yes?
@Trai_Dep: (Oops, hit the wrong reply arrow: sorry, ARP!)
Obviously people are feeling less confident – but it boggles my mind that the economy is based on how people feel. People are fickle and irrational (and that’s not neccessarily bad) but I find it very bizarre that we build our financial infrastructure on top of this.
Like this from the article:
“Just when you think confidence can’t go any lower, the bottom falls out of it, and you can be sure the rest of the economy is not far behind,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd.
So just because people are feeling worse about the economy, everything tanks? I can’t think of any kind of science where beliefs about the results actually changes the results. You might misread or misinterpret things due to carelessness, buas, etc but the way you feel about your metrics doesn’t influence them. Yet if a couple thousand people feel the economy is lousy, all of a sudden the economy becomes lousy. Weird.
@oneandone: It’s not that strange because the people who think the economy is bad may act on it. If I think I’m going to lose my job, I’m not going to buy a house or a new fancy TV or something like that.
I understand what you mean, though. The stock market is the simplest example. Take a strong, consistent company and freak out the right people, make them sell and all of the sudden its stock is worth less than before.
@ndfnd: @BlckMg s dng th Tm Wrp gn!!!: BlckMg: Y r mrn. Pls g bck t hgh schl nd d nt cm bck ntl y hv tkn bsc sttstcs crs.
Gee, an economic illiterate running the Oval Office, an economic illiterate running the House of Representatives, and an economic illiterate running the Senate, and the consumers are worried. That’s a real puzzler, isn’t it?
@Ssscorpion: Didn’t Bush say the fundaments of our economy were strong a few weeks before the bottom fell out? Didn’t Phil Grahm say there’s no problem and we’re a nation of whiners? Didn’t the Hannity’s and Limbaughs of the world say it was a media generated scare to get Obama elected and the economy was fine?
I’m willing to take the bet on the battle of wits between Obama v. Bush on the economy any day of the week. Just because someone disagrees with you, it doesn’t mean they are stupid.
@ARP: Yes, Bush did say that. And that fact that Obama disagreed with him is proof that Obama is an economic illiterate because Bush was right. The fundamentals of the economy were strong – and still are strong. Anybody who thinks otherwise simply doesn’t know what economic fundamentals are. Strong economic fundamentals include things like having few barriers to starting a business, few trade barriers, a low tax burden, plenty of available investment capital, courts that uphold legal contracts, respect for property rights, etc.
@Ssscorpion: When is management ever competent or “literate”. (Of course, looking by great economists like Greenspan, one has to question the value of economic literacy.)