Consumer confidence fell sharply to 39.8 in October, its lowest reading since March 2009 and a surprisingly poor result given the pre-release expectation of moderate improvement.
The already somber consumer mood is worsening. While the economy appears to still be slowly growing, consumer confidence remains in an exceptionally low range typically indicative of recession.
The question remains whether or not this pessimistic mood, coupled with increasing concerns about a potential recession on the horizon, will be enough to dampen spending habits. Consumers have demonstrated some resilience of late, as evidenced by the better-than-expected retail sales in September and likely positive consumer contributions to third quarter growth. There is a rising risk that the continued slippage in confidence coupled with an otherwise deteriorating outlook could prompt consumers to further trim their spending and ultimately push the economy to a tipping point.
The extended period of economic malaise and low confidence is also showing signs of frustrating an increasing portion of the U.S. population, setting the stage for a sharply divided electorate heading into the 2012 election cycle.
The near-term outlook continues to be wrought with uncertainty, resulting in market volatility that has been quickly shifting between attitudes of “risk-on” and “risk-off.”
While some recent economic data have surprised to the upside, the economy in the U.S. and abroad remains in a fragile state overall.
To see news coverage featuring Jim’s comments, please visit the following site: