Consumer outlook takes surprise dive Index drops to second lowest since May
10/28/2009CHICAGO - Consumers' confidence about the U.S. economy fell unexpectedly in October as job prospects remained bleak, a private research group said yesterday, fueling speculation that an already gloomy holiday shopping forecast could worsen.
The Consumer Confidence Index, released by the Conference Board, sank unexpectedly to 47.7 in October - its second-lowest reading since May.
Forecasters had predicted a higher reading of 53.1. A reading above 90 means the economy is on solid footing. Above 100 signals strong growth.
The index has seesawed since reaching a historic low of 25.3 in February and climbed to 53.4 in September.
Economists watch consumer confidence because spending on goods and services by Americans accounts for about 70 percent of U.S. economic activity by federal measures. While the reading doesn't always predict short-term spending, it's a helpful barometer of spending levels over time, especially for expensive, big-ticket items.
Recent economic data, from housing to manufacturing, has offered mixed signals but some evidence that an economic recovery might be slow. But yesterday, the figures showed that shoppers have a grim outlook, the Conference Board said, expecting a worsening business climate, fewer jobs, and lower salaries.
That's particularly bad news for retailers who depend on the holiday shopping season for a hefty share of their annual revenue.