US Consumer Confidence Plunges To Record Low in October

Daily Forex Fundamentals | Written by DailyFX | Oct 28 08 14:52 GMT |

The Conference Board's measure of US consumer confidence plunged to a record low of 38.0 from 61.4, signaling that sentiment amongst American households is the worst in over 40 years (records go back to 1967). Looking at a breakdown of the report, it is clear that a recession in the US - which should be confirmed by Q3 GDP figures on Thursday - is being felt by consumers, as those surveyed indicated that current economic conditions had deteriorated and that jobs have become increasingly hard to get. Furthermore, their outlooks for the next 6 months indicated that they thought business conditions would worsen, fewer jobs would be available, and income would decrease. Given the nine consecutive months of job losses we've seen reflected in US non-farm payrolls, it isn't incredibly suprirsing to see consumer confidence turn so pessimistic. What is unexpected, though, is the rise in 1-year inflation expectations to 6.9 percent from 6.2 percent. This is the highest level since July, when commodities were at their peak, and these indications that consumers still anticipate that prices will rise despite the rapid drop in energy and food costs puts the Federal Reserve in a tough position, especially since they are forecasted to slash rates by 50 basis points on Wednesday to 1.00 percent.

DailyFX

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