Consumer Confidence Plunges To New Low

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:

From Bloomberg:

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)

Comments

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  1. Oranges w/ Cheese says:

    Oooh, hold on to your hats guys, this will make the market tank.

    Hooray herd!

  2. BlackMage is doing the Time Warp agaaaaaaain!!! says:

    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.

  3. Plates says:

    You can prove anything with a poll.

  4. KyleOrton says:

    @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.

    • Trai_Dep says:

      @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…

  5. Trencher93 says:

    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?

    • Rectilinear Propagation says:

      @Trencher93: I thought the JC Pennies were already gone…

    • Outrun1986 says:

      @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.

  6. ViperBorg says:

    Duh comes to mind.

  7. RogueSophist says:

    @undefined: @bduddy: I’d be happy if he just pokes around the Internet and learns a bit about sample size and standard deviation. Sigh.

  8. CreativeLinks says:

    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?

  9. KyleOrton says:

    @Trai_Dep: Dude. First I learn there are 5 billion people in this country and then you blow my mind with that? Crazy….

  10. chrisjames says:

    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.

  11. kwsventures says:

    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%.

    • Trai_Dep says:

      @kwsventures: If only he said – and only said – twice daily, “the fundamentals of our economy are strong”. That’d fix everything!

    • ARP says:

      @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.

    • papahoth says:

      @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.

  12. squablow says:

    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.

  13. oneandone says:

    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.

    • KyleOrton says:

      @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.

  14. bduddy says:

    @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.

  15. Ssscorpion says:

    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?

    • ARP says:

      @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.

      • Ssscorpion says:

        @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.

    • orlo says:

      @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.)