US consumer confidence plunged to a record low in October as a worsening financial crisis made Americans anxious about their jobs and pessimistic about the future, a report said today.
The Conference Board said its index measuring consumer sentiment tumbled to 38.0 in October from an upwardly revised 61.4 in September. That was the lowest reading since the index began in 1967. The previous low was 43.2 in December 1974.
"The sharp drop in the consumer confidence index shows that consumers have been really battered, and this last month in particular really took a toll on consumers' outlook," said Terrin Griffiths, economist and industry analyst at California Credit Union League in Rancho Cucamonga, California.
"It shows that consumers are seeing the downturn as having a longer duration."
The result was well below economists' expectations for a reading of 52 and comes after a modest improvement in consumers' mood the prior month. Even the most pessimistic forecast of the 74 economists surveyed by Reuters was 45.
"The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence," the survey quoted Lynn Franco, director of the Conference Board Consumer Research Center, as saying.
Franco said consumers' outlook on the labour market and the inflation outlook had both deteriorated, "and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season."
US government bonds briefly pared losses on the news and the dollar trimmed gains against the yen, but US stocks held gains despite the gloomy data.
The survey for the report was conducted during a turbulent period for world financial markets that saw the collapse of Wall Street investment bank Lehman Brothers and massive declines in the US stock market.
October is shaping up to be the worst month for the benchmark Standard & Poor's 500 stock index in the post-World War II era.
Consumers' evaluation of their present situation fell to 41.9, its lowest since December 1992, from an upwardly revised 61.1 in September.
A year ago, it stood at 118. The expectations subindex plunged to a record low of 35.5 from an upwardly revised 61.5 last month and from 80 a year ago.
Reuters