The confidence of the American consumers crumbled in October at 38,0 points, after 61,4 points in September, a level ever seen since creation into 1985 of this index, announced Tuesday the Conference Board, the private economic service which compiles it. ( Finance Information City )
Exactly a year ago, shortly after the beginning of the crisis on the market of the mortgage credits, the index was at 80 points.
“There is no doubt, these figures are extraordinarily bad”, commented on Ian Shepherdson, economist of High Frequency Economics.
“The impact of the financial crisis over the last weeks had clearly a devastator effect on confidence of the consumers. The fall of the index (- 23,4 points) is the stronger third in its history”, raised the Board Conference.
The figures of September had surprised by their strength, with a third consecutive month of improvement (59,8 points, against 58,5 in August). The analysts had not expected that one light fold for October, at 52 points.
But the households ended up being gained by the ambient moroseness: at the time when they were questioned, during the third week of October, the market indexes came to know historical dives. The banks had to cease lending, with an immediate impact on consumption in a country where, for example, more than 90% of the cars are sold with credit.
“The consumers are extremely pessimistic, and a proportion significantly larger than last month envisages conditions which will worsen for the companies and employment”, the institute commented on.
For the six months to come, 41,5% of the consumers envisage a fall of the number of job offers whereas they were only 26,9% with being also pessimistic in September. The consumers also predict, with 36,6% (against 21% in September), a deterioration of the situation of the companies and a fall of their incomes for 19,7% of them (13,9% in September).
If waitings of the American consumers for the six months to come were to remain as weak as in October (35,5), “that could result in a fall of the consumption from approximately 3,5% into annual rhythm, worse than than we planned (- 3%) for the third quarters”, according to Mr. Shepherdson.
John Ryding, about RDQEconomics, worries about the indications coming from the job market, with an increase in the number of people saying to have evil to find an employment (37,2% against 32,2%), the “worse level since 1993”.
“The labour market clearly worsened in October, because of the credit restriction on the companies and consumers, according to him.
According to Mr. Ryding, the United States should enter soon officially in recession and the figures for employment awaited the next week should reveal “a loss of approximately 200.000 employment” in October and “a new rise of unemployment rate” (6,1% at the end of September).
The Joel Naroff economist stressed that, taking into account the approach of the season of the purchases of Christmas, the households will keep the tight cords of the purse. “It is thus probable that one witnesses a negative growth step only with the third but also at the fourth quarters and perhaps with the first of 2009”.
A little with counter-current, Stephen Gallagher of General society estimated that the consumers will profit from an improvement purchasing power to them, thanks to the fall of the energy prices and other goods. That should support consumption “with the fourth quarters and at the beginning of 2009”, according to him.
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