Consumer Confidence Plunges To Recession Levels

Reuters says that consumer confidence has plunged to levels associated with the recessions of the ’70s, ’80s, and ’90s.

The Reuters/University of Michigan Surveys of Consumers index of consumer sentiment dropped to 69.6, the lowest reading since February 1992, and below analysts’ median forecast for a preliminary reading of 76.3.

The index was at 78.4 at the end of January.

“The sentiment index has only been this low during the recessions of the mid 1970s, the early 1980s and the early 1990s,” survey director Richard Curtin said in a statement.

The survey also said that 86% of consumers believe that the economy is in decline. This is the highest number since 1982.

Consumer confidence plunges [Reuters]
(Photo:Meghann Marco)


Edit Your Comment

  1. Radoman says:

    Ahh for the days of boom and surplus…

    I’m certain that closing down the economic indicators website didn’t help this situation any. Now folks who were previously just scared, are now also blind.

    Like closing your eyes on the freeway, no good can come of this.

  2. laserjobs says:

    And Hank Paulson slips by saying “The Worst is Just Beginning” roh-roh!!!

    + Watch video

  3. yesteryear says:

    “The survey also said that 86% of consumers believe that the economy is in decline.”

    this cracks me up. so basically, it’s bad news that 86% of consumers are smart enough to realize what’s actually happening and might just have to adjust their behavior a tad to survive the economic disaster we are going through? this is bad? hmmm. sounds to me like americans are actually paying attention for once. good for them.

    hopefully they’ll still be paying attention when they go to the polls in november.

  4. Radoman says:

    Interesting video.

    Okay, so if the rates are down though, won’t a lot of these ARMs just reset to a fairly low rate? Or are there a ton these loans that just go up regardless of what the current Fed rate is? Would 2 million people really sign such horrible mortgages?

    Bailing out such bad decisions makes me less confident.

  5. cmdr.sass says:

    The media and politicians are selling fear and the public is buying. What else is new?

  6. @yesteryear: Yes, but the more people are aware and adjust (read: close their wallets), the worse the economy gets. We’re a 70% consumer spending economy, so if everyone cut back by a third, that would eliminate at least a fifth of the total economy.

    Which is sad, because that’s what people *should* do, for their own good.

  7. ARP says:

    @yesteryear: The messed up part of this is that when Americans spend within their means, it might contribute to a recession because it reduces consumer spending. Now if they spend less and invest more on a 1 to 1 ratio, then its partially mitigated. But if a number of people are spending less and simply paying down debt, I’m not sure it helps short term. Long term, its a good thing, but nobody thinks like that anymore, especially politicians.

  8. @ARP: Jinx! Except you said it better.

  9. mantari says:

    I’m still not sure what I should be afraid of. My home is continuing on its modest increase of ~5% a year as it always has been. I never viewed it as an ATM machine.

  10. ironchef says:

    bush effect kicks in.

    Generally that’s what you get for somebody who borrows and spends like a drunken AWOL national guardsman.

  11. ARP says:

    I always wonder about these surveys. It’s never good that people are pessimistic about the economy, but the big question is, “do they adjust their economic habits in response?” I’m sure some do, but is it enough to have a major impact or create a self-perpetuating cycle where people get more pessimistic, spend less, which causes the economy to weaken, which causes more pessimism, etc.?

  12. ARP says:

    @ironchef: God knows I hate Bush, but I’m not sure this is all him. I think part of it has to do with good ol’ fashioned greed, a lack of foresight and American’s “I want it now” attitude. Now, I think Bush helped to created the conditions for this to happen (lack of regulation of mortgage industry, weakening dollar, strongly encouraging shopping to help the war and home ownership, etc.) but I don’t think he pushed us over the cliff.

  13. friendlynerd says:


    Buying in bulk! Terror threat levels aren’t working so well anymore, now they’re threatening to take our iPods away!

  14. ironchef says:


    he’s running record deficits that puts heavy interest pressure and extensive borrowing out the wazoo.

    That $3 tillion Clinton surplus would have been great but that Crawford Texas retard doesn’t know how to run a government.

  15. UpsetPanda says:

    @ARP: You’re right, it’s not all about Bush. The “downturn” is only not because of Bush, or because of greed, it’s everything. People have instant gratification on the brain and this mentality of “must have shiny toy now!” has gotten the better of a lot of people. Buying that luxury car and paying $500 a month on a car payment might not have been too hard back when cash flowed, but now there’s the car payment, and the insurance bills, and oh yes…the mortgage.

  16. timmus says:

    I’m still not sure what I should be afraid of. My home is continuing on its modest increase of ~5% a year as it always has been.

    But you don’t really know the value until it’s time to sell. My mother in law had a desk that appeared on Antiques Roadshow and was appraised by Leslie Keno of Sotheby’s $15K. She eventually tried to sell it, put it on eBay, etc, etc, and after a year couldn’t get more than a few thousand. It’s still in storage. Value is what people will pay, not what people say it is.

  17. @Radoman: It’s a little more complicated than people’s ARM’s just resetting to a lower rate. It’s also about the negative equity issue, where people have loan to value ratios in excess of 1. A home as a depreciating asset was never anyone’s view of how the world works, even though it was always possible. Actually, that’s the wrong way to put it. A declining housing market eroding value was not many people’s view of stuff that was liable to happen, even though it was essentially inevitable.

  18. @ARP: “God knows I hate Bush, but I’m not sure this is all him.”

    Hrm. If the core of the problem has to do with high oil prices, a foreign policy that shut down Iraqi production and antagonizes Venezuela is probably not particularly good for oil prices. Meanwhile, you have tax policies that put incentives on home ownership and child bearing, both of which can cause people to spend more than they can afford (really, I’m not anti kid for anyone but self and wife, but how many people do you hear complaining about the absurdly high cost of kids after they have kids and not having thought about it before). Lastly, you have a “borrow and spend” attitude from the administration that sets a bad role model.

    It’s not all Bush’s fault, but he surely can bear some blame. If you think it’s the housing crisis, he’s got a hand in. If you think it’s oil prices that are undermining consumer confidence, he’s got a big hand in that. If you think it’s the weak dollar, again, he’s got a hand. Again, not all his administration’s fault, but they can take a large heap of blame.

  19. yesteryear says:

    @HRHKingFriday: & ARP:
    I understand the whole 2/3 of the economy is consumer spending thing… in my opinion these stories are pointless. we are in a recession. maybe we haven’t had the 2 quarters of negative growth yet, but it’s coming.

    i was trying to comment on how bizarre these surveys and the media coverage of them is when you step back and look at it for what it is:

    the government wants folks to be ignorant enough about the economy to continue spending at retarded levels, yet the media the government controls keeps running stories like this one – in essence perpetuating the very dips in consumer confidence they are writing about. its fascinating.

  20. I don’t think a mortgage bailout is the solution. And I don’t think tax “rebates” are a solution either. I hate to say this, but higher taxes on the richest 1% (who get the most value out of government anyway), maybe richest 5% even, with a view towards restoring the Clinton surplus and retiring some debt. Would probably strengthen the dollar, possibly lowering oil prices (I’m forgetting that oil is traded in dollars, regardless of the country). Wouldn’t solve the mortgage problem, but the mortgage problem is largely a result of a bad stock market (the capital must go somewhere), and a good stock market, with a sound national economy and a strong dollar makes things work better.

  21. snoop-blog says:

    i think they should really sell credit crunch cereal. i know i’d buy it.

  22. B says:

    @snoop-blog: The cereal is good, but the interest rates will kill you.

  23. Radoman says:

    @PotKettleBlack: Specifically, Hank Paulson says in the video “there are 1.8 million to 2 million adjustable rate mortgages where the rate is going to be reset.”

    Negative amortization aside, does anyone have any numbers on how many of these loans track the Fed rate as opposed to how many of these loans will just automatically increase their rate?

    I am curious how many people were just nuts, as opposed to absolutely insane.

  24. AbsoluteIrrelevance says:

    The consumerist should do a poll on readers consumer confidence. I know I’m purposely savings money (having less and less expensive fun) because I think the economy is going to continuing tanking.

  25. barty says:

    @PotKettleBlack: That’s right, let’s put more taxes on those who actually create jobs in this country. Virtually all of the top 5% are responsible for probably 95% or more of the job creation in this country. For those who haven’t studied economics or finance past a high school level, businesses just pass increased taxes along to the individual. So who gets screwed? You and I. Either through reduced hiring, fewer or smaller raises or price hikes, EVERYONE ends up paying for a tax hike, particularly ones that are targeted at the “rich”.

    Until our government as a whole learns how to control its spending habits (not likely to happen with our current “gimmie” attitude…social programs make up the largest single chunk of gov’t spending) I’m not particularly in favor of giving them more of my hard earned money. They don’t exhibit any more discipline than the average consumer when it comes to debt. Yeah, they might pay it down, but when the next generation of “I don’t want to be responsible for my own life” whiners comes about, they’ll open the floodgates again and we’ll be in even more debt than before. Its time we just start demanding that the government cuts its budget (not just trimming the amount of next year’s increase) instead of taking more money from its citizens. I don’t think it would be too much to ask our elected representatives to find a way to actually cut say, $5 billion a year, from the budget and use the money saved to repay the debt. That’s what your average individual has to do if they’re REALLY serious about getting out of debt, so why should we expect less from the government?

  26. trinidon2k says:

    Isn’t Detroit the most miserable place in America? Why should I believe a survey from Mighigan?

  27. @snoop-blog: Yeah, that would make some mean Credit Crunch treat squares. Actually, peanut butter crunch makes the best “rice krispie” treats, esp if you mix in chocolate chips too!

  28. ARP says:

    @barty: Are you confusing taxation on businesses v. taxation on human people?

    True, businesses are responsible for most jobs. And true, they will pass some increased costs to the consumer.

    But if you cut taxes for the middle and poorer classes and maintain taxes for the wealthy and even add taxes for the ultra-wealthy human people, its not a 1 to 1 increase in prices. Also, the tax revenue could be used for education and healthcare, so it would result in a net gain as a majority of the people would have more money (from reduced tax burdens), and reduced healthcare and education costs. Some have argued that this is fruitless because the rich find loopholes. Well, why not close them rather than completely giving up?

  29. deadlizard says:

    @barty: Like cutting taxes on the rich have
    helped so much on creating jobs, right? Social programs make up the
    largest single chunk of governmet spending? I didn’t know the Pentagon
    was running social programs.

  30. lostalaska says:

    Oh Credit Crunch treat squares sound good, except for the aftermath where the top of your mouth feels like you just ate razorblade crunch…. They put so much of that candy coating on the outside of those things so they don’t go soggy in milk that when you chew a mouthful it might as well be broken glass… and yet I continue to eat them…. Yup, stupid is as stupid does here.

  31. Trai_Dep says:

    Hey, Gawker Gods: rather than implement embedded videos, wouldn’t it be better to have comments we could go back and edit?

    Unless they’re cute kittens frolicking videos.

    + Watch video

  32. Rusted says:

    @cmdr.sass: Well, it is real. Gas way up. Food up. Jobs down. My customers are holding off on fixing their houses. It’s a bit thin out here.

    @UpsetPanda: What car payment? What mortgage?

    @ARP: No, businesses pass all costs on to the consumer. Or they fail.

  33. Dancing Milkcarton says:

    This proves if you keep talking about, you can make it happen. Way to go media!

  34. goodkitty says:

    @lostalaska: What I used to do was to just let them soak. After a couple minutes, they are like al-dente pasta, just right. And, then you can drink the sugary milk.

    (This would be a great time to use the youtube feature to put a video clip in from “Family Guy” where they have the line that goes “my cereal does not cut the roof of your mouth!”)

    But yeah… this “recession” is pretty much our own doing, through reckless spending (not just the war) and ridiculous media fear-mongering. Oh well.

  35. barty says:

    @ARP: About 80% of our jobs come from small businesses, many of which are sole proprietorships or limited partnerships. In other words, those people are usually taxed as individuals NOT as a business entity. THEY are the business. Someone only has to become moderately successful in their business endeavor to be in that top 5% and many two income families fall into that group, many of whom wouldn’t consider themselves to be rich or wealthy after they finish paying their tax bills, mortgage and other bills at the end of the month.

    @deadlizard: When is the last time a poor person provided someone with a job? If you’d stop buying into everything the media says, when we cut taxes in this country, the unemployment rate DECLINED. Gov’t revenues went UP because more people were working and/or got raises because the government wasn’t taking as much. It is worth repeating this. ANY tax always is borne on the back of the individual a bulk of these “hidden” taxes are almost always paid by the consumers. Estimates are that about 20-25% of the price of all goods and services is nothing but taxes. Munch on that for a minute.

    Our defense spending pales in comparison to what is spent on Social Security, subsidized housing, WIC, etc.

  36. @bitfactory: Word. Lets start a movement to start talking about all of KingFriday’s investments not to tank.

  37. deadlizard says:

    @barty: Most jobs in the U.S. are created by small business which I assure you are not in the richest 1%. Maybe not even the richest 5%.

  38. deadlizard says:

    @barty: I imagine corporate welfare, where billions of tax dollars go to subsidize the rich doesn’t count as a social program. I guess when our tax money goes to Exxon is somehow okay.

  39. barty says:

    @deadlizard: I agree our current tax system sucks because it can be too easily manipulated to favor whomever politicians want to suck up to this year. Some of these “corporate welfare” programs are probably not a bad idea given our current tax environment. We have the 2nd highest corporate tax rates in an industrialized nation…which is one of the biggest reasons cited by companies here for moving jobs overseas, so giving them a little break is NOT a bad thing, IMHO. I’m not going to debate the right or wrong of providing them to certain industries because that totally misses the point of what the underlying problem is. Our tax system is broken and costs this country at least a trillion dollars or more yearly in compliance costs, lost productivity, jobs and investment.

    That said, eliminating any kind of tax incentive in our current environment, regardless if you agree with it or not, will result in HIGHER prices to us.

    As of 2004, the top 5% earn a minimum of $157,000. That’s a couple making $80k each or a moderately successful businessman. An owner that employs more than a dozen or so people is probably pushing (or should be anyway) this income level.