CONSUMER CONFIDENCE DROPS FOURTH CONSECUTIVE MONTH

From CNNMoney:

A key barometer of consumer sentiment dropped for a fourth consecutive month, sending the index near its lowest level in two years.

Rising gasoline prices, falling home sales and unstable financial markets have weighed on consumers' spending, the Conference Board reported.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index fell to 87.3 from a revised 95.2 in October. The reading marked the lowest level since October 2005 when it was 85.2. Analysts had expected 91.5.

"We expected a downward trend but it was significantly down," said Anika Khan, an economist at Wachovia.

Economists repeatedly pointed to the worsening housing crisis, tougher lending standards and rising energy prices for the dampened attitudes.

CONSUMER CONFIDENCE HITS TWO-YEAR LOW

From USA Today:

A key barometer of consumer sentiment dropped to the lowest level in two years, igniting concern that the upcoming holiday shopping season would be lukewarm.

The Conference Board said Tuesday that its Consumer Confidence Index fell to 95.6 from a revised 99.5 in September. The reading marked the lowest level since October 2005 when it was 85.2. Analysts had expected 99.5.

Economists closely monitor confidence since consumer spending accounts for two-thirds of U.S. economic activity.

CONSUMER SENTIMENT AT 17-MONTH LOW

From USA Today:

Consumer sentiment fell more than expected in late October to its lowest in more than a year as concerns about the housing slump darkened the economic outlook, a survey released Friday showed.

The Reuters/University of Michigan Surveys of Consumers said its late October figure on consumer sentiment was 80.9, down from the month's preliminary reading of 82 and the final September reading of 83.4. It was the lowest reading since May 2006 when the index stood at 79.1.

Economists polled by Reuters had expected the final October figure to remain unchanged from early in the month at 82.

Consumer sentiment is often seen as a proxy for future spending, which accounts for two-thirds of the U.S. economy.

SOME POSITIVE ECONOMIC NEWS, FINALLY

Although surveys indicate that consumer confidence is falling, consumer spending was on the rise in August. And, while inflation is a concern, core PCE, an inflation figure favored by the Federal Reserve that excludes food and energy, came in at an acceptable 1.8% on an annual basis.

From The New York Times:

Americans made more purchases than expected in August and a crucial inflation indicator cooled, the Commerce Department said yesterday, two indications that the economy is still somewhat insulated from turmoil in the residential housing market.

Consumer spending rose a better-than-forecast 0.6 percent last month, the largest uptick since April, led by strong sales of durable goods. Income increased 0.3 percent, down from a 0.5 percent rise in July but in line with Wall Street forecasts. The rate of wage increases was also slightly down from July.

Consumers also caught a break on rising prices in August. A closely watched inflation gauge, the core personal consumption expenditure deflator, posted its smallest year-over-year gain since February 2004. The core deflator index, which excludes food and energy prices, rose 1.8 percent on an annual basis, continuing a downward trend that stretches back to February.

EXISTING HOME SALES & CONSUMER CONFIDENCE DECLINE

From The New York Times:

Purchases of previously owned homes in August dropped 4.3 percent from July, sending sales to a five-year low, the National Association of Realtors said this morning. The annual sales rate fell to 5.50 million from 5.75 million in July. Existing home sales are down nearly 13 percent over the last 12 months.

The bad news in the housing sector was coupled with a discouraging report on consumer confidence from the Conference Board, whose index dropped to 99.8 in September from 105.6 in August, much more than forecast. The index is now at its lowest level in nearly two years. A weak job market and stagnant salary growth has caused anxiety among consumers, analysts said, suggesting potential declines in consumer spending and job creation over the coming months.

33% OF ECONOMISTS POLLED PREDICT RECESSION WITHIN NEXT YEAR

From MSNBC:

Before the meltdown in the credit markets last month, the Blue Chip (a financial newsletter) consensus pegged the odds of recession in the next year at about one in four. That number recently jumped to one in three, according to Randell Moore, the newsletter’s editor.

The growing signs of economic strain have consumers feeling more pessimistic — especially since most no longer have rising equity in their home to help fund their shopping trips. Consumer confidence dropped sharply in August, based on a widely watched University of Michigan survey.
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You can view the University of Michigan survey here.

You can view the Conference Board survey here.