Tuesday, February 24, 2009

Consumer Confidence falls to 25 – Lowest in History…

Another historic economic number. The lowest range expected by “experts” was 31. Nearly everyone has underestimated the crisis and they are still underestimating.

At some point these numbers will stop falling! If for no other reason than zero isn’t too far away. Will we leap off the bottom and perform a perfect “V” recovery? Not a chance – sorry.

They are still not addressing the real problems of debt. Trying to push more credit into the system will be counterproductive – confidence will not return until adult leadership is in place and ACTIONS that are responsible occur. That’s when confidence will be restored. Until then, all attempts to reinflate only add to the bad math.

U.S. Consumer Confidence Collapsed to Record Low in February

By Bob Willis

Feb. 24 (Bloomberg) -- Confidence among U.S. consumers plunged to a record low in February, signaling spending will slump further as unemployment soars.

The Conference Board’s index declined more than forecast to 25 this month, the lowest level since data began in 1967, from a January reading of 37.4, the New York-based research group said today. Another report showed the drop in home values accelerated in December.

Retailers such as Macy’s Inc. and J.C. Penney Co. are likely to keep hurting as soaring foreclosures and mounting job losses cause households to retrench. President Barack Obama is trying to mend the breach in confidence with a stimulus plan that he says will save or create more than three million jobs and with funds aimed at keeping Americans in their homes.

“It is extremely difficult to be confident in an environment of severe job losses,” Tom Porcelli, senior economist at Castlestone Management Ltd. in New York, said before the report. “There are massive headwinds weighing on the consumer.”

Economists forecast confidence would fall to 35, from a previously reported 37.7 for January, according to the median of 72 projections in a Bloomberg News survey. Estimates ranged from 26.7 to 42.

Home prices in 20 metropolitan areas fell 18.5 percent in December from a year earlier, the biggest drop since records began in 2001, according to S&P/Case-Shiller. All the regions were down during the period, led by a 34 percent slump in Phoenix and a 33 percent slide in Las Vegas.

Employment Slump
Today’s confidence survey showed the share of consumers who said jobs are plentiful slumped to 4.4 percent from 7.1 percent last month. The proportion of people who said jobs are hard to get increased to 47.8 percent, the highest level since 1992.

Americans also viewed their financial well-being in future months with more pessimism. The Conference Board’s gauge of the outlook for the next six months decreased to 27.5, also the lowest on record, from 42.5 in January.

The share of respondents expecting their incomes to rise over the next six months dropped to 7.6 percent from 10.3 percent.

The measure of present conditions dropped to 21.2 from 29.7.

“Not only do consumers feel overall economic conditions have grown more dire, but just as disconcerting, they anticipate no improvement in conditions over the next six months,” Lynn Franco, director of the Conference Board’s consumer research center, said in a statement.