It’s been clear for a while now that the financial crisis has spread into the real economy. But even with that knowledge, today’s consumer confidence numbers are a shocker:
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.
I’m not entirely sure what the methodology of this survey is, but at this rate the number is rapidly heading towards negative territory. After all, the component numbers could still get significantly worse:
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.
Everybody in America is acutely aware of the stock-market crash, which surely was the single largest contributor to the plunge in consumer confidence. But even so, those thinking business conditions are bad are still in a minority. The US consumer is a supertanker, and collectively we take a long time to turn around. So although this number is down dramatically today, I suspect it’s going to continue to fall for a while yet.