US consumer confidence plunges to 2-year low

WASHINGTON: US consumer confidence sank in October to its lowest level in more than two years as Americans worried about the economy and high unemployment, a key survey showed Tuesday.

The Conference Board said its consumer confidence index stood at 39.8 in October, down sharply from 46.4 in September, when it had improved slightly.

"Consumer confidence is now back to levels last seen during the 2008-2009 recession, said Lynn Franco, consumer research director of the Conference Board.

"Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased."

Consumers' assessment of present-day conditions fell for the sixth consecutive month "as pessimism about the current economic environment continues to grow," Franco said.

Consumer confidence was much weaker than expected, dropping to the lowest reading since March 2009. The average estimate was for the index to fall to 46.0.

"Consumer fears remain intense and threaten spending growth," said Scott Hoyt at Moody's Analytics.

Analysts said that recent volatility in the stock markets may have played a role in the survey, whose cutoff date was October 13.

"In our view the decline in the index reflects the plunge in stock prices from mid-September through early October, during which the S&P fell by nearly 10 percent. The market has since recovered all this ground, reaching its highest level since early August," said Ian Shepherdson at High Frequency Economics.

Moody's Hoyt said there were some positive elements in the data. Consumers' views of current labor market conditions, with the unemployment rate stuck at 9.1 percent, "did not deteriorate much" from very poor levels, he said.

"As the economy continues to grow, confidence should recover, unless the low confidence results in lower spending and drives further economic weakness. That still seems unlikely, a view supported by buying plans data," he said. (AFP)