Consumer confidence hits record low
2/25/2009NEW YORK - Americans' battered confidence in the economy went into free-fall in February and sank to a new low, a major index shows.
Fresh economic news out yesterday probably will compound the gloom.
Major retailers including Target Corp., Home Depot Inc., and Macy's Inc. reported depressed fourth-quarter results.
Another widely watched index showed home prices tumbled by the sharpest annual rate on record.
And Federal Reserve Chairman Ben Bernanke said the economy is suffering through a "severe contraction" and is likely to keep shrinking the first half of this year.
The Conference Board, based in New York, said its Consumer Confidence Index, which was down slightly in January, plummeted more than 12 points in February to 25, from the revised 37.4 last month. That was well below the 35.5 level that economists surveyed by Thomson Reuters had expected.
The index set a new low. It had hovered in the high 30s the past few months. The index originated in 1967. A year ago, the consumer confidence reading stood at 76.4.
"Looking ahead, increasing concerns about business conditions, employment, and earnings have further sapped confidence and driven expectations to their lowest level ever," said Lynn Franco, director of the Conference Board Consumer Research Center. The report showed worries about inflation, which had for several months, had picked up, she said.
Economists carefully monitor consumer confidence because consumer spending is more than two-thirds of economic activity.