Confidence falls again, that makes the third time in last three months.
At 10:00 this morning we learned that U.S. consumers are growing restless. This could be bad news not just for President Bush, but for the entire economy.
Consumer confidence sagged for the third straight month in October to its lowest level since March, according to a survey by the Conference Board, a private research group.
Though consumer spending is critical to the economy's health, making up two-thirds of U.S. gross domestic product, it's worth throwing a couple of big caveats at this news: First, the confidence index, at 92.8, is nearly 50% higher than it was at its nadir at the beginning of the Iraq war last year. And consumers don't always spend the way they feel; confidence plunged after the Sept. 11 terror attacks, but consumers still managed to crowd auto lots to take advantage of 0% financing. Finally, a silver lining in this October's survey was that its closely watched measures of the current state of the job market held steady.
But the Conference Board's index, the broadest such measure available, is still nowhere near its level in the late 1990s, when it regularly got above 130. Though "current conditions" readings held firm, the board's questions about the coming six months revealed growing pessimism, and economists doubt higher gasoline and home-heating oil prices will brighten the outlook -- or facilitate spending sprees.
The survey found that plans to buy major appliances fell to their lowest level in a year, while plans to buy a new home were the lowest since January. "High and rising energy prices, along with sluggish payroll growth, are weighing heavy on the minds of Americans, along with worries over a definitive outcome to the presidential election," said Sherry Cooper, chief economist at BMO Nesbitt Burns.
Speaking of the election: Since 1968, October confidence readings below 100 have heralded defeat for the incumbent party in the presidential election, with two exceptions: In 1984, President Reagan won re-election with the confidence index at 99.1. And in 2000, the Democrats lost the White House despite October confidence at 135.8. In that election, Vice President Al Gore lost in the Electoral College but won the popular vote.
(wsj.)
Consumer confidence sagged for the third straight month in October to its lowest level since March, according to a survey by the Conference Board, a private research group.
Though consumer spending is critical to the economy's health, making up two-thirds of U.S. gross domestic product, it's worth throwing a couple of big caveats at this news: First, the confidence index, at 92.8, is nearly 50% higher than it was at its nadir at the beginning of the Iraq war last year. And consumers don't always spend the way they feel; confidence plunged after the Sept. 11 terror attacks, but consumers still managed to crowd auto lots to take advantage of 0% financing. Finally, a silver lining in this October's survey was that its closely watched measures of the current state of the job market held steady.
But the Conference Board's index, the broadest such measure available, is still nowhere near its level in the late 1990s, when it regularly got above 130. Though "current conditions" readings held firm, the board's questions about the coming six months revealed growing pessimism, and economists doubt higher gasoline and home-heating oil prices will brighten the outlook -- or facilitate spending sprees.
The survey found that plans to buy major appliances fell to their lowest level in a year, while plans to buy a new home were the lowest since January. "High and rising energy prices, along with sluggish payroll growth, are weighing heavy on the minds of Americans, along with worries over a definitive outcome to the presidential election," said Sherry Cooper, chief economist at BMO Nesbitt Burns.
Speaking of the election: Since 1968, October confidence readings below 100 have heralded defeat for the incumbent party in the presidential election, with two exceptions: In 1984, President Reagan won re-election with the confidence index at 99.1. And in 2000, the Democrats lost the White House despite October confidence at 135.8. In that election, Vice President Al Gore lost in the Electoral College but won the popular vote.
(wsj.)
posted by Sid Cottingham | 12:10 PM
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