November 1st, 2011

Consumer Confidence Drops at the Worst Possible Moment

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**Today’s guest post is contributed by LearnVest.**

consumer confidence

Hey, let’s have a quick catch-up quiz to see how you’re feeling about the economy:

  • How do you feel about current business conditions? What about in the next six months?
  • How do you think employment is doing?
  • Do you think it’ll get easier or harder to find a job in the next six months?
  • How do you think your family’s income will change in the next six months?

You basically just took a consumer confidence survey. And if you’re like the 5,000 U.S. households surveyed last month, you might not be feeling so good.

On the last Tuesday of each month, the Conference Board, a global research organization, releases results on how confident regular people are feeling about the economy and their own finances. The consumer confidence index was started in 1985, and the first results were set at 100. Since then, the index has fluctuated around that number.

This month, the results were as negative as they were in March 2009, at the height of the recession: Our current consumer confidence score is 39.8. Economists would like to see it at at least 90, which would indicate the economy is on solid footing.

Collectively, consumers (read: anyone who buys anything) feel pretty glum about the economy. Translation: They’re worried about employment, and their incomes seem insecure.

A Truly Black Friday

Although this might feel like people’s opinions rather than economic fact, this is bad news, because, as you know, we’re headed into the holiday season. Right now, families and individuals are putting together their holiday budgets, and if they’re looking ahead and thinking they might have to take a pay cut, they’re less likely to throw a bunch of big-ticket items on their credit cards.

That would definitely be responsible thinking on their part, but it’s not what retailers want to hear: Consumers account for 70% of U.S. economic activity, so as go the consumers, so goes the economy.

Well, most of the time.

Read the rest of this story over at LearnVest!

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