Consumer Confidence Takes a Dive
The Conference Board said its consumer confidence index plummeted this month, reinforcing other recent indicators that consumer attitudes are working against the sagging economy.
The New York-based research organization said the index fell 12.5 points to 60.4, which is only slightly higher than the consumer sentiment measured at the trough of the 1982 recession.
Between June, the last time the index rose, and September, it fell in gradual steps by only 5.1 points, to 72.9.
The 100 reference point on the scale is a level recorded in 1985.
Consumers, lenders, and government officials alike have rapidly turned downbeat.
"Everything just shut off on Oct. 1," said James M. Meere, vice president of Marine Midland Services Corp. a Florida-based consumer finance unit of Marine Midland Banks Inc.
"The consumers that I speak to are Middle America," he said. "They're not making any major purchases."
Though the Commerce Department on Tuesday reported that gross national product grew at an annualized rate of 2.4% in the third quarter, GNP growth is widely expected to slow down again in the current quarter. On Monday, Federal Reserve Chairman Alan Greenspan said the economy has "turned demonstrably sluggish."
Consumer spending helped spur the recent GNP rebound. But lenders and economists expect consumer purchases to remain weak until employment figures and disposable income improve.
"The consumers have figured out that this recovery isn't really going anyplace, and there isn't really anybody that's expanding employment," said Kelly Mathews, chief economist at First Security Corp., Salt Lake City.
The Conference Board said a growing number of people are pessimistic about business conditions and job opportunities.
At the same time, slightly more people expect to buy cars in the next six months - 7.8% of those surveyed, compared with 7.4% last month. But, lenders say, any increase in auto sales would not be enough to significantly improve sluggish activity.
The number of consumers planning to purchase a home in the next six months fell slightly this month to 3.3% from 3.4%.
"Overall, the demand is not there on the installment side," said Marie Gerace, assistant vice president and director of consumer lending at Star Bank in Cleveland. "I think it's going to stay like this for the remainder of 1991."