Consumer Confidence Drops To All Time Low
In May an important and key measure of consumer confidence reached an all time low as it dropped the most it has ever done in 16 years. The reason for this is that many Americans are worried about the future of their jobs and the business conditions.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 57.2, the lowest level since October 1992, from a revised 62.8 in April. Economists had expected the index to decline to 61, according to a consensus compiled by Briefing.com.
With gas and food prices on the rise, home values declining and lending policies getting more strict, consumers of all incomes are being hit hard, according to Scott Hoyt, senior director of consumer economics at Moody’s Economy.com.
“There is nobody off the hook right now,” said Hoyt. The index - based on a survey of 5,000 U.S. households conducted for The Conference Board by TNS - has now declined for five months in a row. The index uses 1985 as the benchmark year when the index stood at 100.
“Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers’ confidence in the overall state of the economy,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement.
Those claiming business conditions are bad jumped to 30.6% from 26.5%, while those claiming business conditions are good slumped to 13.1% from 15.4% last month. The Present Situation Index, which measures where the average consumer feels the economy is right now, decreased to 80.7 from 90.6. When the average consumer thinks about the economy, the most important factor is always his or her job situation, according to Ken Goldstein, economist at the Conference Board.
The percentage of consumers saying jobs are hard to get was virtually unchanged, 28% versus 27.9% in April. Those claiming jobs are “plentiful” declined to 16.3% from 17.1% Consumers pay their bills with the paycheck from their job, and “the concern is the paycheck now is getting stretched and it is only going to continue to get stretched,” said Goldstein.