The ABC Consumer Confidence index plummeted last week, falling from -41 to -47, sustaining "one of its steepest one-week drops in the last quarter century, following last week’s troubling jobs report with an all-hands retreat from what had been a tentative positive trend in consumer attitudes." At -47 the index is essentially at the average 2009 level of -48, and far below the average since 1985 of -12. As far as the US consumer is concerned, this recession is far from over.
The fall washed away an advance in which the CCI had improved to its best in 16 months. It’s vastly worse than its average, -12 in weekly polls since late 1985, much less its highs at the start of the past decade – including its record high, +38, 10 years ago this week.
Two of the index’s three components – ratings of personal finances and the buying climate – matched their largest-ever one-week drops, down by 5 and 4 points, respectively. The third measure, on the national economy, simply has less room to move; 91 percent say it’s bad.
This is what a dramatic and rapid loss of confidence in the economy looks like:
ABC had these observations for the reasons for the dramatic drop:
The drop follows last Friday’s report from the Bureau of Labor Statistics indicating a loss of 85,000 jobs in December, defying many economists’ expectations of growth. Unemployment remains at 10 percent – with four in 10 of the jobless out of work for more than 27 weeks. The arrival of Christmas shopping bills may also have contributed to the fall. While this has not been a consistent issue in past years, consumers may now be especially vulnerable to sticker shock given their low confidence overall.
Virtually every aspect of consumer financial strength is in the gutter:
Today 54 percent of Americans rate their personal finances negatively, up 5 points from last week (as noted, tying the record one-week spike) half or more for 74 of the last 77 weeks, a record by far. It’s 11 points worse than its long-term average. Seventy-six percent call it a bad time to spend money, also matching its largest one-week rise and 13 points worse than average. And, as noted, the third component of the CCI is the worst by far: Only 9 percent positively rate the economy, 29 points below average. Twenty-four percent say it’s an excellent or good time to buy things; it was 28 percent last week. The best was 57 percent on Jan. 16, 2000. The worst was 18 percent, last reached Oct. 19, 2008. Forty-six percent say their own finances are excellent or good; it was 51 percent last week. The best was 70 percent, last reached in January 2000. The worst was 39 percent June 28 and 21, 2009.
As for the trend, it is not the administration's friend:
The CCI had gained 6 points from early December until last week, reaching its highest since late September, 2008. That’s gone: The index is now within 7 points of its lowest, -54 last January. It’s been below -40 for a record 91 consecutive weeks. As noted, the 6-point one-week slide is highly unusual; the last weekly drop this sharp was in late July 2008. The CCI’s fallen by 6 points eight times, 7 points four times and 9 points once in its history.