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Consumer Confidence Hits 16-Year Low

High gas prices, plunging home values leave consumers downcast

By Mark Huffman
ConsumerAffairs.com

May 24, 2008

The Conference Board Consumer Confidence Index hit its lowest level since October 1992 in May, falling from 62.8 in April to 57.2.

"The Consumer Confidence Index now stands at a 16-year low," said Lynn Franco, Director of The Conference Board Consumer Research Center. "Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers' confidence in the overall state of the economy. Consumers' inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead."

As for the short-term outlook, Franco says the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead.

The May Index shows growing pessimism on the part of consumers. Those claiming business conditions are "bad" rose to 30.6 percent from 26.5 percent, while those claiming business conditions are "good" decreased to 13.1 percent from 15.4 percent last month.

Consumers' assessment of the job market was also more downbeat. The percentage of consumers saying jobs are "hard to get" was virtually unchanged, 28.0 percent versus 27.9 percent in April. Those claiming jobs are "plentiful" declined to 16.3 percent from 17.1 percent.

Consumers' short-term expectations weakened further in May. Consumers anticipating business conditions to worsen over the next six months increased to 33.6 percent from 27.4 percent, while those anticipating business conditions to improve increased slightly to 10.4 percent from 10.1 percent in April.

The outlook for the labor market was little changed, but remains pessimistic. The percent of consumers expecting fewer jobs in the months ahead declined moderately to 32.4 percent from 32.9 percent, while those anticipating more jobs was virtually unchanged, 8.7 percent versus 8.8 percent in April. The proportion of consumers expecting their incomes to increase declined to 13.4 percent from 15.5 percent.

The 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 May's preliminary results was May 20th.

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