As the Holidays Approach Consumer Confidence is Low

As we head into the Holiday gifting season as new study from the from the Consumer Conference  Board  shows that shoppers are feeling anything but optimistic.  Consumer Confidence Index decreased sharply in October. The Index now stands at 71.2 (1985=100), down from 80.2 in September. The Present Situation Index decreased to 70.7 from 73.5. The Expectations Index fell to 71.5 from 84.7 last month.  What does this mean? Basically, it’s hard to feel good about spending money when the government is threatening to shutdown and the US debt continues to rise with no end in site. 

When I started The Recessionista five years ago, I thought the slow economy would be a temporary thing   Five years later, that is not the case and the website is still going strong with many imitators nipping at our heels.  Why? Because thrift really is the new chic and consumers are more careful than ever about spending.

“Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations. Similar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 2012, and the government shutdown in 1995/1996,” says Says Lynn Franco, Director of Economic Indicators at The Conference Board. ” However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months.”

Here are the findings from the recent study:

• Consumers’ assessment of current conditions declined moderately. Those claiming business conditions are “good” decreased to 19.0 percent from 20.7 percent, however, those claiming business conditions are “bad” edged down to 23.0 percent from 23.9 percent. Consumers’ appraisal of the job market was less favorable than last month. Those saying jobs are “plentiful” was virtually unchanged at 11.3 percent from 11.4 percent, while those saying jobs are “hard to get” increased to 35.8 percent from 33.6 percent.
• Consumers’ expectations, which had softened in September, decreased sharply in October. Those expecting business conditions to improve over the next six months fell to 16.0 percent from 20.6 percent, while those expecting business conditions to worsen increased to 17.5 percent from 10.3 percent.
• Consumers’ outlook for the labor market was also more pessimistic. Those anticipating more jobs in the months ahead decreased to 15.3 percent from 16.1 percent, while those anticipating fewer jobs increased to 22.7 percent from 19.1 percent. The proportion of consumers expecting their incomes to increase rose to 15.8 percent from 15.1 percent, however, those expecting a decrease rose to 15.4 percent from 13.9 percent.  ( Source: The October 2013 Consumer Confidence Survey^®   The Conference Board)

What are your thoughts readers? It’s hard to feel like getting excited about Holiday spending and gifting in the current economic climate.