Consumer Confidence Index fell to its lowest level in two years, causing worries for retailers about the forthcoming holiday shopping season.
The New York-based Conference Board said Tuesday that its Consumer Confidence Index dropped to 95.6 from a revised 99.5 in September. It was the lowest reading since 85.2 in October 2005 when gas and oil prices soared after hurricanes Katrina and Rita pummeled the Gulf Coast. Analysts had expected 99.5.
"Further weakening in business conditions has, yet again, tempered consumers' assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead," said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. "In addition, consumers are growing more pessimistic about the short-term future and their rather bleak outlook suggests a less than stellar ending to this year.
The Present Situation Index, which measures how shoppers feel now about the economy, declined to 118.8 in October from 121.2 in the prior month. The Expectations Index, which measures shoppers' outlook over the next six months, declined to 80.1 from 85.0.
Economists closely monitor confidence since consumer spending accounts for two-thirds of U.S. economic activity.
Tuesday's report heightens worries for retailers, who are already bracing for a challenging holiday shopping season after a disappointing fall.
Shoppers are contending with a slew of problems: higher food and gas prices, a deepening housing slump and tighter credit, among them.
And while the Federal Reserve is expected to cut interest rates on Wednesday to boost the economy and lure more investors into the troubled credit markets, economists say the move is probably too late to aid the holiday season.
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