Consumer confidence in the United States has plummeted to its lowest level in two-and-a-half years, indicating that Americans remain unhappy with the current economic situation.
The Conference Board, a private research group, reports that the index currently stands at 39.8, a significant drop from 46.4 in September. A score of 90 reflects that the economy is doing well.
Despite recent economic growth, this significant drop suggests that the majority of consumers still have a negative outlook on the economy and could trigger a cutback in spending. Issues such as deteriorating home values and inadequate job availability have led to this pessimistic attitude.
Junior marketing and supply chain management double major Ari Hock believes the decline in confidence is partly the result of a decrease in company spending. “A lot of managers within the marketplace are holding back on hiring new workers,” Hock said. “In turn, unemployment continues to be a problem.”
Consumer confidence has not been this low since the 2008-2009 recession, according to Lynn Franco, Director of the Conference Board Consumer Research Center. Economists had expected the index to rise slightly rather than experience this steep drop, as this is a level that is much more commonly seen during a recession than a period of recovery.
However, it is clear that any short-lived hope that people had has vanished for the time being. “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,” Franco said.
Consumers are not expecting things to get much better in the coming months. Those anticipating business conditions to improve over the next six months decreased from 11.8 percent in September to 9.1 percent in October. In addition, people expecting a greater number of jobs in the months ahead dwindled fell from 11.9 percent to 11.3 percent.
It is also a troubling time for Americans to feel this way because many households are starting to make their holiday budgets. Retailers preparing for the busy holiday season will now need to modify their expectations for sales in the coming months.
Junior broadcast journalism major Jordan Kamzan said he will probably not spend as freely this holiday season and imagines this will be the same for many other people.
“I think companies will struggle this year,” Kamzan said. “A lot of people don’t feel very secure when it comes to their jobs and income because of the way the economy’s been lately.”