Consumer index sinks to all-time low
Conference Board's confidence measure falls in January to lowest level since 1967 inception.
NEW YORK (CNNMoney.com) -- A key measure of consumer confidence fell to an all-time low in January, according to a report released Tuesday.
The Conference Board, a New York-based business research group, said that its Consumer Confidence Index fell to 37.7 in January from the revised 38.6 reading in December. The month's reading represents an all-time low going back to the index's inception in 1967.
Economists were expecting the index to increase to 39, according to a Briefing.com consensus survey of economists.
"Consumers are losing a pretty big chunk of their net worth right now," said Adam York, economic analyst at Wachovia. York said that loss is reflected in the value of their home and in their stock market portfolios.
"It doesn't feel good and, as a result, consumers are spending less and they are worried about the outlook for the U.S. economy and their own personal situation," said York. "We are not surprised that consumers are pretty despondent."
He said the weakness in the labor market was deteriorating the consumer's sense of confidence.
The present situation component, which measures current conditions, dipped to 29.9 from 30.2 in December. The expectations measure, which gauges consumer sentiment in the future, fell to 43 from 44.2.
Lynn Franco, director of The Conference Board Consumer Research Center, said that improvement in the Expectations Index was critical to a change in the trend of consumer sentiment.
"Looking ahead, consumers remain quite pessimistic about the state of the economy and about their earnings," said Franco in a written statement. "And, until we begin to see considerable improvements in the Expectations Index, we can't say that the worst of times are behind us."
Those respondents saying business conditions are "bad" increased to 47.9% from 45.8% and those saying business conditions are "good" dipped to 6.4% from 7.7% in the previous month.
The report showed a very slight improvement in the labor market readings. Those respondents saying jobs are "hard to get" decreased to 41.1% from 41.5% and those who said jobs are "plentiful" rose slightly to 7.2% from 6.5%.
For the coming six months, however, consumer sentiment remained gloomy. Those respondents looking for business conditions to worsen over the next half-year dipped to 31.1% from 32.9% and those who expected conditions to improve edged down to 13.3%,from 13.4% in the previous month.
The outlook for the labor market was mixed. Respondents expecting fewer jobs dipped to 36.7% from 40.6%, and those expecting more jobs ticked lower to 9.4% from 9.8%.
Not many consumers were looking for a pay raise. The number of respondents looking for a bump up in their pay fell to 10% in January from 12.7%.
The Consumer Confidence Survey is based on a sample of 5,000 U.S. households.
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