Instant View: Consumer confidence falls to 48.5 in Sept

NEW YORK (BestGrowthStock) – September consumer confidence ebbed to its lowest levels since February, driven by deteriorating labor market and business conditions, according to the Conference Board on Tuesday.

The index of consumer attitudes fell to 48.5 in September from a revised 53.2 in August.

The median of forecasts from analysts polled by Reuters was for a main September reading of 52.5. Forecasts ranged from 48.0 to 55.0.

The August reading was revised down slightly from an original 53.5.

Inflation expectations eased slightly, even after the Federal Reserve has said it is ready to take action to keep yields down in an effort to stimulate growth. Consumers’ one year inflation expectations edged down to 4.9 percent from 5.0 percent the previous month.

Consumers’ labor market assessment worsened. The “jobs hard to get” index rose to 46.1 from 45.5, while the “jobs plentiful” index decreased to 3.8 from 4.0.

ANALYSTS COMMENTS:

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The consumer confidence number is grim. The back end of the U.S. Treasury curve is once again riding the disinflationary wave. You don’t need a double dip recession to get lower long-term rates. All you need is a sense that growth is well short of trend, leading to even lower inflation. If you grind to an inflation rate of near zero, even a 2.0 percent 10-year yield has value. Even without a recession a 2.0 percent 10-year yield is not out of the question.”

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

“They are weak numbers, but there is a bit of a tendency of this number to be weak in September so I think part of the decline is seasonal. But even beyond that it is clear that consumers are worried about the state of the economy. The weakness seems to be most pronounced in the expectations of business conditions rather than employment, although employment conditions did deteriorate.”

KATHY LIEN, DIRECTOR OF CURRENCY RESEARCH, GFT, NEW YORK:

“The deterioration in sentiment should not be a complete surprise since the Conference Board’s report echoes a drop seen last week in the University of Michigan Consumer Sentiment survey. With unemployment at a 26 year high, confidence among consumers remain weak and this decline in sentiment will give the Fed a stronger reason to increase stimulus in November.”

NICHOLAS COLAS, CHIEF MARKET STRATEGIST AT THE CONVERGEX

GROUP IN NEW YORK:

“There’s not a lot of good in the report. It really missed expectations, though I’m somewhat surprised that the market is taking it on the chin like it is. Other confidence surveys have come in quite weak, suggesting that confidence remains low. That isn’t surprising given the labor market. Confidence will remain low until the jobs situation improves significantly and that won’t happen until next year at the earliest.”

Instant View: Consumer confidence falls to 48.5 in Sept