Consumer Confidence Plunges to Record Low

Confidence_1028

chart via FusionIQ, Bloomberg

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The Conference Board reported Consumer Confidence Index for
October hit a record low of 38.

Is there any connection between weak consumer confidence readings and
bullish reversals in the stock market? To decide, have a look at the following
quick-and-dirty overview (which includes all data going back to the Feb-67 start
of the confidence series):

Consumer_conf_spx

(*Note: Interim low – market was already in a secular upswing.)
(#Note:
Consumer confidence readings that were closest to the latest reading.)

Table via Mike Panzner

From the Conference Board

"The Conference Board Consumer Confidence Index™, which had improved
moderately in September, fell to an all-time low in October. The Index
now stands at 38.0 (1985=100), down from 61.4 in September. The Present
Situation Index decreased to 41.9 from 61.1 last month. The
Expectations Index declined to 35.5 from 61.5 in September. The Consumer Confidence Survey is based on a representative sample
of 5,000 U.S. households.

Says Lynn Franco, Director of The Conference Board Consumer Research
Center: "The impact of the financial crisis over the last several weeks
has clearly taken a toll on consumers’ confidence. The decline in the
Index (-23.4 points) is the third largest in the history of the series,
and the lowest reading on record. In assessing current conditions,
consumers rated the labor market and business conditions much less
favorably, suggesting that the fourth quarter is off to a weaker start
than the third quarter.

Consumers’ appraisal of current conditions deteriorated sharply in
October. Those saying business conditions are "bad" increased to 38.3
percent from 33.4 percent, while those claiming business conditions are
"good" declined to 9.2 percent from 12.8 percent. Consumers’ assessment
of the labor market was also much more negative. The percentage of
consumers saying jobs are "hard to get" rose to 37.2 percent from 32.2
percent in September, while those claiming jobs are "plentiful"
decreased to 8.9 percent from 12.6 percent."

FYI: This sort of sentiment always favors the challenger, not the incumbent party, in the White House race.

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Source:
Consumer Confidence Index™ Plummets to an All-Time Low
The Conference Board, October 28, 2008
http://www.conference-board.org/economics/ConsumerConfidence.cfm 
      

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