Consumer confidence hit an all-time low in December, according to the private research firm known as The Conference Board. The exceptionally bleak outlook comes in the face of an economy mired in recession, rising layoffs, the loss of trillions in home and stock equity, and one of the worst holiday shopping seasons in the past 40 years.
The Conference Board's Consumer Confidence Index slipped to 38 in December, lower than the expected 45. November's reading was revised down to 44.7, a moderate increase from October.
Swiftly deteriorating economic conditions in the last three months of 2008 are behind the record low number, Conference Board Research Center director Lynn Franco said in the press release.
"The overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half," she said in a statement.
Franco notes that the present situation index, a sub-index which reflects consumer sentiment about current business conditions and employment prospects, plunged to 29.4 in December from 42.3 in November. These levels are still higher than the 1981-82 recession, but are near the levels seen in the wake of the 1990-1991 recession.
The expectations index, which is sub-index that measures overall consumer sentiments toward the short-term future economic situation "continues to hover at historical lows" Franco said. However, she added that the index appears to be moderating.
Both the present situation and expectations indices "bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom," Franco said.
The survey is based on a sample of 5,000 households in the United States.
Consumers believe that conditions in December grew "substantially worse" than in November, the survey showed. 46 percent of those surveyed categorized business conditions as "bad," up from 40.6 percent in November. At the same time, only 7.7 percent view business conditions as "good," down from 10.1 percent last month.
Declines in the labor market, with over 500,000 jobs lost in November alone, were also reflected in the survey. 42 percent of consumers said that jobs are "hard to get," up from 37.1 percent in November. Those claiming jobs are "plentiful" slipped from 8.7 percent last month to a mere 6.2 percent.
In addition, consumers see little improvement in business conditions over the next six months. The numbers reflect an increasingly polarized consumer base, with consumers either growing more negative or more positive.
While in November only 28.3 percent expected conditions to worsen in the short-term, that number rose to 32.8 percent in December. Conversely, more consumers expect improvement - 13.4 percent - then the 11.4 percent that saw brighter skies ahead in November.
In terms of the labor market over the six month, 41 percent of consumers now expect fewer jobs, higher than the 33.7 percent last month. However, there were slightly more optimists, with 9.7 percent anticipating the situation to improve, up from 9.2 percent in November.
Employment situation aside, consumers agreed that incomes will likely not increase. Only 12.7 percent of those surveyed expecting an increase in the next six months, down from 13.7 percent last month.
by RTT Staff Writer
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