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News | Wednesday, 29 October 2008

Lowest-ever US consumer confidence registered

United States’ (US) consumer confidence plummeted to its lowest level on record this month, as the deepening of the financial crisis made Americans suddenly much more pessimistic about their current situation and prospects.
The release of the Conference Board index yesterday bolstered fears that US consumers were pulling back on spending in a big way heading into the critical holiday season, driving the economy into a deep and long-lasting recession.
Consumer confidence fell from a reading of 61.4 in September to 38 this month – the lowest level since the index was established more than 40 years ago and well below economists’ expectations that it would drop to 52.
The previous all-time low in the index was set in December 1974, when consumer confidence fell to a level of 43.2.
“Consumer confidence didn’t so much descend in October as fall right out of the sky,” said Abiel Reinhart, economist at JPMorgan in New York.
The drop in consumer confidence was all the more jarring because it came even as the price of petrol fell, removing what earlier this year was one of the biggest drains on the finances of US households.
Most economists are predicting that consumption, which accounts for a large chunk of US gross domestic product, will shrink in the second half of 2008.

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29 October 2008
ISSUE NO. 556

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