Consumer confidence plummeted in October, as families held their most negative assessment of their finances in more than half a century, according to the Index of Consumer Sentiment, released Friday by the Reuters/University of Michigan Surveys of Consumers .
The index dropped 12.7 points to 57.6 in the October survey, the largest monthly decline in consumer confidence in the history of the surveys. The data indicates the likelihood of a long and deep recession, according to Richard Curtin, director of the survey.
Families held a negative outlook on virtually every area of their finances and the economy, reporting increases in job loss, income declines, and postponed purchases. Only one in five consumers said their finances had gotten better in October. The largest proportion of consumers in the history of the survey said they thought the economy was in recession.
Restrictions in the availability of credit, as well as uncertainty about jobs and income, have caused consumers to put off purchases that involve financing, including homes, vehicles, furniture, appliances, and home electronics.
Consumers also held little confidence in the federal government to address the financial crisis. “Consumers rated the current administration’s economic policies more unfavorably than ever before in the long history of the surveys,” Curtin said in a statement, “and the majority of consumers reported they had less confidence in the Federal Reserve.”
The survey, a closely-watched economic indicator, has been conducted monthly since 1952 by the Institute for Social Research in Ann Arbor, Mich.
Pat Curry is senior editor, sales and marketing, at BUILDER magazine.
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