Consumer confidence plummeted in October, falling to a level not seen since the depths of the financial crisis-induced recession in 2009. The Conference Board’s Consumer Confidence Index fell short of economists’ consensus estimates, as did the University of Michigan Consumer Sentiment survey released two weeks ago.
In its announcement Tuesday, Conference Board economist Lynn Franco said “consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased.”
Analyst Doug Short of Advisor Perspectives, writing on his blog, notes that the pervasive low confidence following the official end of the recession in 2009 is similar to, though more severe than, two previous recoveries, all three of which were considered “jobless recoveries.” Short reasons that consumer confidence is a proxy for high unemployment.
This conclusion is shared by the nation’s top bankers. In interviews published in Tuesday’s Atlanta Journal-Constitution (but prior to the release of confidence survey data), Wells Fargo CEO John Stumpf said the lack of confidence was “the No. 1 challenge today in America” and his counterpart at Chase, Jamie Dimon, said the reason for the malaise is that “it’s been a long time of 9% unemployment.” Dimon called for a Marshall Plan to get Americans back to work and said fixing the U.S. tax code was the critical first step.