CONSUMER CONFIDENCE REBOUNDS IN NOVEMBER - But Still Near October's Historic Low!
FALLING GASOLINE PRICES A POSITIVE FACTOR, BUT UNEMPLOYMENT AND SLUGGISH HOUSING MARKET STILL WORRY CONSUMERS!
There's a bit of optimism in recent economic numbers, but it doesn't really foretell an economic turnaround. The November Index by The Conference Board, a private research group, was 44.9, up from the record-low 38.8 reading in October, but still the second lowest index of overall consumer confidence since the index began 34 years ago.
The Present Situation Index, a guage of consumer opinion of current economic conditions, fell to 42.2 in November, from 43.5 in October. Consumer Expectations for economic improvement over the next six months increased to 46.7 in November, from 35.7 the prior month.
The Conference Board cites the end of the uncertainty during the 2008 Presidential Election Campaign, as well as tumbling prices for gasoline, as two key factors positively affecting consumer confidence. However, consumers are still fearful of growing unemployment figures, both nationally and here in Illinois, falling stock prices and home values, and an extremely tight, uncertain credit market for consumer and business loans and home mortgages.
Last Tuesday, the S & P/Case-Shiller Index of home prices in the 20 largest U.S. Metro Areas fell 17.4% in September, as compared to September, 2007. The Chicago Index indicated a less severe drop - 10% - yet still high. September data is the most current.
Recent estimates of Gross Domestic Product (GDP) released by the U.S. Commerce Department dropped at a seasonally-adjusted rate of 0.5% during the Third Quarter, 2008, according to figures released last Tuesday. This was the worst decline in GDP since the Third Quarter, 2001, the period which included the September 11th attacks.
Residential Fixed Investment, which includes housing spending, plunged 17.6% during the Third Quarter, 2008, a bit less than the 19.1% decline earlier projected. The Third Quarter decline comes on top of a 13.3% drop during the Second Quarter of this year.
Said Lynn Franco, Director of The Conference Board Consumer Research Center, "Despite the improvement in the expectations index this month, consumers remain extremely pessimistic and the possibility that economic growth will improve in the first half, 2009 remains highly unlikely."
For more, read coverage on November 25th by Bob Willis via Bloomberg.com, as well as a story by Riva Froymovich and Jeff Bater in the November 25th Wall Street Journal.
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