Consumer Confidence Worse Than Expected, Drops To All-Time Low

October 28, 2008 4:40 p.m. EST

New York, NY (AHN) - Consumer confidence, which had improved moderately in September, declined to an all-time low in the month of October, a report revealed Tuesday.

The Conference Board said the Consumer Confidence Index plunged 23.4 points in October to 38.0, from an upwardly revised low of 61.4 in September.

The index for October is at the lowest level ever recorded since the survey began in 1967 by the private research group.

"The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence," Lynn Franco, Director of The Conference Board Consumer Research Center, said in a statement on Tuesday.

"The decline in the Index (-23.4 points) is the third largest in the history of the series, and the lowest reading on record," Franco added.

The market analysts on Wall Street were expecting the consumer index to decline to 52 in October.

The U.S. economy has already suffered by the subprime contagion, which started more than 12 months ago, and the consumers are losing confidence with higher gas prices, increasing unemployment rate and rising inflation index.

The report showed that consumers' appraisal of current business conditions has deteriorated sharply in October.

Consumers believing that business conditions are "bad" increased to 38.3 percent from 33.4 percent, while those claiming business conditions are "good" dropped to 9.2 percent from 12.8 percent.

The number of consumers saying jobs are "hard to get" advanced from 32.2 percent in September to to 37.2 percent in October, while those claiming jobs are "plentiful" dropped to 8.9 percent this month from 12.6 percent in September.

"Looking ahead, consumers are extremely pessimistic, and a significantly larger proportion than last month foresees business and labor market conditions worsening," Franco said.

She added, "Their earnings outlook, as well as inflation outlook, is also more pessimistic, and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season."

Consumbers believe that over the next six months the condition of business could worsen and the number surged to 36.6 percent in October from 21.0 percent last month. The report said number of consumers expecting their incomes will increase slipped to 10.8 percent from 15.1 percent.