October 3, 2011 (Chris Moore)
Consumer confidence improved slightly in September as consumer’s shifted from anticipating a worsening economy in the future to one that is stagnated at its current depressed levels according to the latest Surveys of Consumers by Reuters/University of Michigan.
Consumers continued to be very pessimistic about their year ahead with the majority of the consumers expecting their personal finances to remain unchanged, with little or no economic growth and no improvement in the unemployment rate.
Sixty percent of the consumers, the highest level ever recorded, expected their finances to be stagnant in the year ahead. The majority of the consumers reported their finances had worsened over the last year by a margin of two-to-one over those who said their finances had improved.
Eighty-nine percent expect the unemployment rate to remain the same or increase over the next year while three-fourths of the consumers believed that economic conditions would remain unchanged at best during the year ahead and that any economic growth would be too weak to improve the jobs situation.
All three indices that make up the Index of Leading Economic Indicators registered gains in September, but were down from last year’s levels.
The Consumer Sentiment Index climbed 6.6 percent to 59.4 in September, up from 55.7 in August but down 12.9 percent from 68.2 in September of last year.
The Consumer Expectations Index increased to a level of 49.4 in September, up 4.2 percent from a level of 47.4 in August and down 18.9 percent from a level of 60.9 in September 2010.
The Current Conditions Index climbed 9.0 percent to 74.9 in September, up from 68.7 in August but down 5.9 percent from 79.6 in September of last year.
Richard Curtin, Surveys of Consumers chief economist said, “Although the small September gain still left consumer confidence at low levels, the more troublesome finding was that consumers have come to anticipate economic stagnation as the most likely outcome over the longer term. Whether it’s their own diminished income expectations, the inability of the economy to generate a sufficient number of jobs, or uncertainty about future taxes, spending and entitlements, the most probable outcome expected by consumers is a prolonged period of economic stagnation. Rather than spending more and taking on new debt, consumers are intent on rebalancing their finances to prepare for a new economic era.”
Tags: Surveys of Consumers, Reuters/University of Michigan, consumers, economic slowdown, finances, recession, financial expectations
Reuters/University of Michigan