Consumer confidence index at all-time low
Conference Board's measure sinks amid dismal job market and credit crunch.
NEW YORK (CNNMoney.com) -- A key measure of consumer confidence fell to an all-time low in December amid a dismal job market and uncertain outlook for the new year.
The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index fell to 38 in December from the downwardly revised 44.7 in November.
Economists were expecting the index to increase to 45.5, according to a Briefing.com consensus survey of economists.
"The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008," said Lynn Franco, director of the Conference Board Consumer Research Center, in a statement.
Wachovia senior economist Mark Vitner said that assessment is "right on the money."
"It looks like the uptick in November was a knee-jerk response to the presidential election being over," he said. The "false reading in November" bumped their expectations too high, leading to disappointment this month, Vitner added.
The gloomy news came at the end of a full year of recession. The credit crunch has strained the financial system as central banks struggle to raise capital.
At the same time, housing prices have plunged and S&P 500 has plummeted more than 40%. The dollar has been weak against major currencies. This year's holiday retail season is predicted to have been the worst in decades.
Perhaps most unsettling for Americans is the deteriorating job market. Layoffs and income cuts were widespread this year. The number of Americans filing for first-time unemployment benefits rose to a 26-year high for the week ended Dec. 20.
Nearly 2 million jobs were lost in 2008, and the slumped stock market means some nest eggs have shrunk considerably.
In the report, those saying jobs are "hard to get" rose to 42% from 37.1% in November, while those saying jobs are "plentiful" sank to 6.2% from 8.7%.
"The overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half," Franco said in the statement.
Consumers anticipating business conditions to worsen over the next six months increased to 32.8% from 28.3% in November, the report said. Respondents anticipating fewer jobs in the months ahead increased to 41% from 33.7%.
Vitner said the index may see a slight uptick in January as the new year can provide a psychological boost, but the poor employment conditions will prevent any long-term improvement.
"While the recession may bottom out in mid-2009, unfortunately we don't expect unemployment to hit bottom until early 2010," Vitner said. "I don't think we'll see the confidence index improve dramatically for quite some time."