Consumer confidence hits new low

February 24, 2009 7:34:40 AM PST
Americans' already battered confidence in the economy went into free fall in February, sinking to new lows as consumers grew more fearful over massive job cuts and shrinking retirement accounts.

The New York-based Conference Board said Tuesday that its Consumer Confidence Index, which was down slightly in January, plummeted more than 12 points in February to 25, from the revised 37.4 last month. That was well below the 35.5 level that economists surveyed by Thomson Reuters expected.

The index, which had hovered in the high 30s over the past few months, broke new lows since it began in 1967. A year ago, the consumer confidence reading stood at 76.4.

The Present Situation index, which is consumers' assessment of current economic conditions, fell to 21.2 from 29.7 last month. The Expectations' Index, which is consumers' outlook over the next six months, sank to 27.5 from 42.5.

"The decline in the Present Situation Index, driven by worsening business conditions and a rapidly deteriorating job market, suggests that overall economic conditions have weakened even further this quarter," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. "Looking ahead, increasing concerns about business conditions, employment and earnings have further sapped confidence and driven expectations to their lowest level ever."

Franco added that the report showed worries about inflation, which had eased over the past several months, picked up.

Economists carefully monitor consumer confidence since consumer spending accounts for more than two-thirds of economic activity.

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