The Conference Board Consumer Confidence Index Declines Again in October

October 25, 2005

The Conference Board Consumer Confidence Index, which had plummeted in September, declined again in October. The Index now stands at 85.0 (1985=100), down from 87.5 in September. The Present Situation Index declined to 108.2 from 110.4. The Expectations Index decreased to 69.5 from 72.3 last month.

CCIThe Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world’s largest custom research company. The cutoff date for October’s preliminary results was October 18th.

“Much of the decline in confidence over the past two months can be attributed to the recent hurricanes, pump shock and a weakening labor market,” says Lynn Franco, Director of The Conference Board Consumer Research Center. “Consumers’ assessment of current conditions, however, remains above readings a year ago, but their short-term expectations are significantly below last October’s level. This degree of pessimism, in conjunction with the anticipation of much higher home heating bills this winter, may take some cheer out of the upcoming holiday season. In order to avoid a blue Christmas, retailers will need to lure shoppers with sales and discounts.”

Consumers’ overall assessment of ongoing conditions was less positive in October. Those claiming business conditions are “good” decreased to 23.8 percent from 25.2 percent. Those claiming conditions are “bad” increased to 18.6 percent from 17.8 percent. The employment picture was also less buoyant. Consumers saying jobs are “hard to get” increased to 25.3 percent from 25.0 percent, while those claiming jobs are “plentiful” was virtually unchanged at 20.8 percent.

Consumers’ short-term outlook was mixed, but less positive than last month. Those anticipating business conditions to worsen in the next six months decreased to 18.4 percent from 19.6 percent. Those expecting business conditions to improve, however, also declined to 14.0 percent from 15.4 percent.

The outlook for the labor market was less optimistic. Consumers expecting more jobs to become available in the coming months decreased to 12.2 percent from 14.0 percent, while those expecting fewer jobs eased to 23.7 percent from 24.8 percent in September. The proportion of consumers anticipating their incomes to increase in the months ahead fell to 16.8 percent from 18.1 percent last month.

Source: Consumer Confidence Index, The Conference Board.

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